Tsogo Sun Earnings Rise as Gamblers Buck Economic Trends
Tsogo Sun Holdings Ltd. (TSH), a South African casino operator, said first-half profit rose on higher takings from both its hotels and gaming divisions as gamblers shrugged off slowing economic growth.
Net income increased 34 percent to 743 million rand ($84 million) in the six months through September from a year earlier, the Johannesburg-based company said today in a statement. Revenue advanced 10 percent to 4.8 billion rand.
“We target middle-market consumers in South Africa,” Chief Executive Officer Marcel von Aulock said by phone from Johannesburg. They are experiencing economic stress, but aren’t as affected by unemployment as less well-off consumers, he said.
Consumer spending in Africa’s biggest economy is under pressure amid unemployment of 25.5 percent and economic growth that will slow to 2.5 percent this year, the lowest since the 2009 recession, according to central bank and government estimates. The Reserve Bank cut interest rates to a 30-year low of 5 percent on July 19 to support economic growth.
Tsogo’s shares rose 3.2 percent to 24.72 rand in Johannesburg by 10:57 a.m., paring four trading days of losses. About 7,500 shares changed hands, or 4 percent of the daily average over the last three months.
Tsogo, which has more than 90 hotels in Africa, said that while the trading performance in the first half was “encouraging,” its outlook is uncertain due to inconsistent monthly results in the period. September trading levels were particularly strong, it said.
The company raised its half-year dividend by 20 percent to 24 cents per share. The shares have risen 50 percent this year, compared with a 16 percent increase in the FTSE/JSE Africa All Share Index.
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