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Shares of SkyCity Entertainment Group (NZ: SKC) took a significant hit on Thursday, plummeting by as much as 22.5% to NZ$1.34, marking their lowest level since March 24, 2020. The ASX-listed shares of SkyCity (ASX: SKC) mirrored this decline, dropping by up to 14% to AU$1.38, also hitting their lowest level since March 24, 2020. This plunge in share prices also positioned SkyCity as the top loser on the ASX All Ordinaries index (.AORD).
The sharp decline in SkyCity's share price followed the casino operator's announcement of a downward revision to its net profit after tax forecast for the year. The company now expects its net profit after tax to range between NZ$120 million and NZ$125 million, down from the earlier projection of NZ$125 million to NZ$135 million. This revision reflects the challenging operating conditions faced by SkyCity, compounded by a potential uptick in costs.
In response to these challenges, SkyCity announced its decision to suspend dividends for the second half of fiscal year 2024 and for the entirety of fiscal year 2025. This suspension aligns with the company's efforts to navigate the tough operating environment and manage its financial resources prudently amid uncertainties in the market.
The casino operator attributed the cut in its annual profit forecast and the suspension of dividends to the tough operating conditions prevailing in the industry. The ongoing challenges, coupled with the potential for increased costs, prompted SkyCity to undertake measures aimed at safeguarding its financial stability and preserving shareholder value.
SkyCity's struggles have been reflected in its stock performance year-to-date, with the New Zealand-listed shares falling by 4.95% and the Australia-listed shares dropping by around 14% as of the last close. The downward trajectory underscores the impact of the challenging operating environment on the company's financial performance and investor sentiment.
Despite the setbacks, SkyCity remains focused on navigating through the current headwinds and positioning itself for long-term growth and sustainability. The company continues to assess its strategic priorities and explore opportunities to enhance operational efficiency and profitability in the face of evolving market dynamics.
