Star Entertainment Group Shares Drop 7% After Disappointing Q2 Results

2 min read | January 20, 2025 02:23 PM AEDT | By Team Kalkine Media

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Star Entertainment Group Shares Drop 7% After Disappointing Q2 Results — Image source: © Poringdown | Megapixl.com

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Highlights

Revenue Decline: The company reported a 15% drop in revenue for the second quarter, with a notable decline attributed to the closure of Treasury Brisbane Casino and ongoing softness at The Star Sydney.

Negative EBITDA: Star recorded negative EBITDA of $8 million for Q2, though it was an improvement over the $18 million loss in Q1 due to reduced operating expenses.

Liquidity Concerns: With just $78 million in available cash, Star continues to face significant liquidity issues as it struggles to secure additional funding.

Star Entertainment Group Ltd’s (ASX:SGR) shares continued their downward spiral on Monday, falling 7% to 13 cents in afternoon trading. This latest decline marks a sharp drop of one-third in the company's share price over the past month. The downturn follows the release of Star's disappointing second-quarter update, which highlighted ongoing challenges within the business.

For the three months ended December 31, Star posted revenue of $299 million, representing a 15% decline compared to the previous quarter. Management attributed this dip to the closure of the Treasury Brisbane Casino and a continued downturn at The Star Sydney, which has been impacted by the introduction of mandatory carded play and cash limits. While The Star Gold Coast experienced revenue growth, it wasn't enough to offset the overall decline.

Operational Losses

Star reported negative EBITDA of $8 million for Q2, a marked improvement from the $18 million loss posted in the first quarter. The company attributed this improvement to a significant reduction in operating expenses, which fell by 18% quarter on quarter to $52 million. This decrease was driven by lower corporate costs, reduced activity, and the closure of the Treasury Brisbane casino.

Liquidity Woes

Despite the improvement in EBITDA, Star's liquidity situation remains a significant concern. At the end of the quarter, the company had only $78 million in available cash. While Star has been working to secure additional liquidity, it has yet to find the necessary support to stabilize its financial position.

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