The Star Entertainment Group’s shares have plunged nearly 15 per cent after the casino operator flagged a full year earnings dip amid soft economic conditions and continued weakness in VIP spending.
The Star told the ASX on Tuesday domestic growth trends had weakened since the release of its first half results in February, with international VIP spending still more than 30 per cent down on a year ago, and capital works at its flagship Sydney venue also causing disruption.
The Star’s full year earnings for 2019 are now expected to be between $550 million and $560 million, as much as $18 million or 3.2 per cent less than last year’s $568 million result.
The group said in light of the operating environment it had brought forward “cost management initiatives” that are expected to save between $40 million and $50 million a year.
“The slowing of domestic growth in 2H FY2019 reflects a combination of more challenging macroeconomic conditions across our markets, lower hold rates on tables games in private gaming rooms and the impact of disruption from capital works at The Star Sydney,” the company said in a release.
Shares in the company fell 14.63 per cent to $3.85 by 1018 AEST on Tuesday, nearly 40 per cent down on the all-time high of $6.395 in February 2018.
The company said it expects to have the cost savings measures in place by the first quarter of FY20.
The Star operates casinos in Sydney, Brisbane and on the Gold Coast.