Star Entertainment announces 500 layoffs, adjusts earnings forecast as conditions worsen

April 19 (Reuters) – Australia Star Entertainment Group Ltd. (SGR.AX) Shares fell 11 percent on Wednesday after announcing 500 job cuts and lowered its annual profit forecast, as regulatory restrictions and weak consumer behavior dent the casino operator’s bottom line.

The company will lay off some full-time equivalent employees across the group, cancel short-term and other incentives for fiscal year 2023, etc., to reduce operating expenses.

Star’s spokesman told Reuters that the company has about 8,000 employees, and the layoffs accounted for about 6.25% of its workforce. About 4,500 of the total work at its Sydney waterfront casino, the spokesman said.

Star shares fell as much as 11.4 per cent to A$1.205, their biggest intraday drop since mid-February and the biggest decliner on the ASX 200 benchmark index (.AXJO).

Star’s Sydney and Gold Coast casinos in particular faced unfavorable operating conditions, with earnings hit by a compounding impact of regulatory operating restrictions and low consumer spending behaviour, Star said.

Australian casino operators have been under regulatory scrutiny over allegations of breaches of anti-money laundering laws over the past two years, with a proposed casino tax hike in New South Wales also posing a major challenge.

“From an operating environment perspective, the group’s current earnings performance is at an unprecedentedly low level, excluding the COVID-19 period,” the company said.

If current conditions persist, Star said it expects earnings before interest, tax, depreciation and amortization (EBITDA) to be in the range of A$280 million ($188.44 million) to A$310 million for the 2023 financial year.it is expected in advance Between A$330 million and A$360 million.

Star has hired Barrenjoey Capital Partners to conduct a strategic review of The Star Sydney and look for any “structural alternatives” to maximize shareholder value.

The company is also progressing on the proposed sale of the Sheraton Grand Mirage resort on the Gold Coast, with indicative bids expected soon, and said it was accelerating a debt refinancing program to improve its liquidity position.

($1 = 1.4859 AUD)

Reporting by Sameer Manekar in Bengaluru; Editing by Subhranshu Sahu

Our standards: Thomson Reuters Trust Principles.