Gold Reef First-Half Net Drops 23% as South African Consumers Battle Debt

Gold Reef Resorts Ltd., a South African hotel and gaming company, said first-half profit dropped 23 percent as consumers continued to battle high household debt and municipal and utility prices increased.

Net income slipped to 108 million rand ($14.8 million) in the six months ended June 30 from 140 million rand a year earlier, the Johannesburg-based company said in a statement published in the Business Day newspaper today. Sales fell 1.6 percent to 1.1 billion rand.

South Africa’s household debt was 78.4 percent of disposable income in the first quarter, according to the Reserve Bank. Electricity prices were increased 24.8 percent in March. South Africa’s central bank has reduced its benchmark interest rate seven times since the end of 2008 to help pull Africa’s largest economy out of recession.

“Economic conditions in South Africa remain difficult,” Gold Reef said. Relief from the interest-rate cuts made during 2009 is only expected to start benefitting consumers in the final quarter of this year, it said.

To contact the reporter on this story: Nicky Smith in Johannesburg at nsmith38@bloomberg.net

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