SkyCity Earnings Call: NZICC Debut Amid Profit Squeeze

SKYCITY Entertainment Group Limited ((SKYZF)) has held its Q2 earnings call. Read on for the main highlights of the call.

SkyCity Entertainment’s latest earnings call painted a cautious but constructive picture for investors. Management acknowledged weaker first‑half earnings from softer gaming, higher Adelaide costs and tax noise, yet stressed emerging growth drivers, especially the newly opened NZICC, a solid cash position and cost-out programs that underpin confidence in a stronger second half.

NZICC opens as multi‑year growth engine

The New Zealand International Convention Centre formally opened in February and has already secured a meaningful bookings pipeline. Management expects at least 110,000 visitations in the second half of FY26, driving incremental revenue across the wider Auckland precinct, including hotels, food and beverage, the Sky Tower and parking.

Asset sales aimed at unlocking NZD 200m

The board is pursuing an asset monetization plan targeting about NZD 200 million in proceeds over the next 12 months. The 99 Albert Street property is being actively marketed through CBRE, while further options are being assessed with external advisers to optimize valuation and bolster balance‑sheet flexibility.

Loyalty shift via Carded Play and SHOW

Carded Play was rolled out across New Zealand casinos in July 2025, aligning with earlier guidance and reshaping customer tracking. The shift, supported by roughly 4,000 new sign‑ups per week in December, is boosting data quality and adoption of the SHOW loyalty program while maintaining high customer satisfaction scores.

Operating cash flow remains resilient

Despite transitional pressures, SkyCity generated positive operating cash flow of NZD 56.1 million in the first half of FY26. This funded around NZD 36.5 million of stay‑in‑business capital expenditure, and management kept full‑year CapEx guidance at NZD 100–110 million, signaling disciplined investment.

Debt profile and covenants under control

Leverage and covenant metrics stayed within guidance, with the half‑year covenant ratio at around 2.83 times and expected to ease to about 2.7 times by year‑end. The group has no debt maturing before May 2027 and is already weighing refinancing strategies for that retail bond, limiting near‑term funding risk.

Cost savings to lift second‑half earnings

Group‑wide cost-saving initiatives are underway, with further benefits expected in the second half to counter inflation and regulatory costs. Management reaffirmed FY26 underlying EBITDA guidance of NZD 190–210 million and signaled a 43%/57% earnings skew toward H2, supported by NZICC ramp-up and efficiency gains.

H1 revenue and gaming softness weigh on results

First‑half group revenue fell 2.4% to reflect a NZD 12.3 million decline, driven largely by weaker gaming. Total gaming revenue dropped 6.3%, or NZD 19 million, as both machine and table performance lagged, impacted by the Carded Play transition and lower premium play activity across the network.

Underlying EBITDA slide masks distorted NPAT

Underlying EBITDA dropped more than 28% to NZD 85.5 million, putting clear pressure on earnings quality. Underlying NPAT also declined, while reported NPAT nearly doubled due to one‑off tax and accounting adjustments that make headline comparisons misleading for investors.

Adelaide faces cost inflation and restructuring

Adelaide delivered a soft performance amid rising operating costs, with commentary pointing to roughly 9.5% OpEx growth. The business absorbed additional AML and host responsibility spending, B3 program costs of about NZD 13.4 million and higher cost of sales, prompting a significant cost‑out program including workforce reductions.

Non‑cash tax items cloud comparability

Two large non‑cash tax adjustments drove volatility in the first‑half P&L. A NZD 32.5 million charge followed a reassessment of Australian tax losses, while a NZD 43.6 million credit arose from recognizing deferred license value against NZICC building value, materially distorting reported tax and NPAT.

Online gaming opportunity pushed further out

The timeline for New Zealand online gaming licensing has slipped by around five months, with licenses now expected from late 2026. That delay pushes meaningful regulated online revenue into the back end of FY27, and SkyCity kept H1 online investment modest at NZD 3.8 million as it staggers spending.

Carded Play reshapes visitation and premium play

The Carded Play rollout changed how visitation is measured and has reduced some observed gaming visits, particularly among previously uncarded players. Management also pointed to weaker premium and VIP activity and estimates that carding could equate to roughly 15–20% of formerly untracked revenue, a key planning assumption for Adelaide.

Guidance leans on NZICC ramp and efficiencies

Looking ahead, SkyCity reaffirmed FY26 guidance for underlying EBITDA of NZD 190–210 million and reported EBITDA of NZD 170.6–190.9 million, including full‑year B3 costs. The company expects NZICC‑driven visitation of more than 110,000 in the second half, asset sales near NZD 200 million by early 2027, disciplined CapEx of NZD 100–110 million and leverage trending modestly lower, with online revenues now pushed into late FY27.

SkyCity’s earnings call underscored a business in transition, absorbing regulatory, cost and gaming headwinds while bringing major new assets onstream. For investors, the near term remains challenging, but the NZICC opening, asset monetization plan and cost programs offer tangible catalysts that could support a gradual earnings recovery into FY26–27.