By Ambar Warrick
Investing.com -- Star Entertainment Group Ltd (ASX:SGR), Australia’s second-largest casino operator, trimmed its fiscal 2023 earnings outlook on Wednesday, while outlining a slew of cost-cutting measures, including job cuts, amid a “rapid deterioration” in its operations.
The firm now expects underlying earnings before interest, tax, depreciation and amortization for the year to June 2023 of between A$280 million and A$310M (A$1= $0.6736), down from its previous forecast of A$330M to A$360M.
The casino operator also announced a reduction of 500 roles, a salary freeze for non-unionized employees, and a cancellation of incentives for the year.
Star said it was undertaking a strategic review of The Star Sydney, which accounts for about half of its annual revenues, in the face of a proposed hike in taxes for Casino operators in New South Wales, which is set to be enforced in July. The firm had flagged such a move earlier this year, along with an up to A$1.3 billion impairment charge from the proposed hike in duties.
The firm said that today's measures, along with earlier cost-cutting initiatives, are expected to cut expenditures by more than A$100M annually.
A broader regulatory crackdown on casinos over alleged money laundering has also hampered Star’s operations, with the group flagging a significant deterioration in conditions.
“To put the operating environment into perspective, the Group’s current earnings performance is at unprecedented low levels,” Star said in a statement filed with the Australian Securities Exchange.
Star has seen dwindling revenues in recent months due to the impact of several government probes, COVID-19, as well as a series of class action lawsuits.
But the company now has to contend with a decline in consumer spending, as a rising cost of living dissuades more people from gambling.