SkyCity Entertainment Group (ASX:SKC) outlined a first-half FY2026 performance it described as a “planned period of operational transition,” with earnings tracking in line with the full-year guidance first provided in August 2025 and reiterated at the company’s October AGM.
First-half results: gaming headwinds offset by non-gaming growth
Chief executive officer Jason Walbridge said group visitation was steady, with a small reduction partly due to changes in measurement and the introduction of Card of Play in New Zealand casinos in July 2025. Group revenue declined 2.4% (NZD 12.3 million), driven by a 6.3% (NZD 19 million) fall in total gaming revenue across both machines and tables.
The weaker revenue flowed through to lower reported and underlying EBITDA. Walbridge pointed to higher costs across several areas, including increased investment in anti-money laundering (AML) and host responsibility—especially in Adelaide—plus costs associated with the opening of the New Zealand International Convention Centre (NZICC), technology costs, some one-off legal fees, and higher costs of sale tied to non-gaming growth. He said cost-saving initiatives were being implemented, with a focus on managing the cost base “without compromising our customer offering.”
NZICC opens; SkyCity looks for second-half uplift
A key milestone for the half was the opening of the NZICC on February 11, with the first live event held the following day. Walbridge called it a “world-class convention center” and said initial feedback has been “incredibly positive.”
SkyCity said bookings for the remainder of FY2026 were “very positive,” with over 110,000 visitations already confirmed. Walbridge said this supports confidence in increased revenue and earnings for the Auckland precinct in the second half, particularly across hotels, food and beverage, Sky Tower, and car parking, and added that FY2027 confirmed events and pipeline suggest significantly higher visitation.
Management said total development costs—including the NZICC, air bridges, adjacent laneway, more than 1,100 additional car parks, and the Horizon by SkyCity Hotel—remain in line with prior guidance of approximately NZD 750 million.
In Q&A, SkyCity described its pipeline definition as events where a customer has typically conducted a site visit and SkyCity has begun planning and issued a quote, while “confirmed” business reflects contracted events. The company reiterated its objective for the NZICC to “break even within the box” in FY2027, while driving wider precinct benefits, but said it was too early to provide detailed guidance on fixed costs or how conversion of the broader pipeline might alter the economics.
Card of Play rollout: more visibility, some VIP impact
Walbridge said Card of Play has been in place for more than six months across New Zealand casinos and that customer satisfaction has remained high despite added friction. He said the system is changing the customer mix as previously uncarded players sign up and is providing materially better visibility into customer behavior.
SkyCity reported steady new customer sign-ups, citing around 4,000 per week during December, and said take-up of the new “Show by SkyCity” loyalty program has been strong among carded players. Management also said increased host responsibility and AML requirements have affected play levels from some VIP players, and the company is working to refine customer interactions to meet regulatory obligations while minimizing impact on experience.
Online gaming regulation timeline pushed out
SkyCity said the New Zealand government’s process to regulate online gaming has been delayed by about five months versus prior expectations. Management stated the current expectation is for licenses to be issued from December 1, 2026, with licensed applicants able to continue operating from that point and unlicensed operators required to cease by June the following year.
Walbridge said the Online Casino Gambling Act is expected to be passed into law by May 1 and that SkyCity is transitioning to a new platform partner alongside applying for a Malta gaming license. Given the regulatory delay, he said revenue receipt will likely be deferred until the latter part of FY2027 compared with previous expectations. He reiterated SkyCity views regulation as necessary to address what it characterized as an uneven “gray market” and said the company’s focus remains on being market-ready while phasing investment carefully.
Costs, balance sheet priorities, and FY2026 guidance reiterated
Chief financial officer Peter Fredricson said underlying EBITDA for the period was “very much in line” with expectations. He outlined an expected 43%/57% skew between first and second halves of FY2026, driven by NZICC pre-opening costs in the first half and revenue contribution in the second half, alongside higher hotel occupancy and average daily rate (ADR) from February to June.
Fredricson also discussed two significant non-cash tax adjustments recorded below EBITDA. First, SkyCity de-recognized Australian tax losses from its balance sheet, taking a NZD 32.5 million charge to tax expense, after concluding increased Adelaide railway building capex over the next 10–15 years would push full usage of tax losses beyond 12 years. Second, on completion of the NZICC, the company credited a deferred license value of NZD 246 million against building value in fixed assets, generating a NZD 43.6 million credit to tax expense, partially offsetting a prior FY2024 tax impact linked to legislative change on building depreciation. Fredricson said the two adjustments “offset each other” for the half year.
On leverage, Fredricson said covenant metrics were 2.83x for the half and expected to be around 2.7x at year-end. He said SkyCity remains focused on delivering at least NZD 200 million from asset monetization to reduce debt and support credit metrics, with a target of removing the negative outlook to its credit rating by February 2027. While no debt matures before May 2027, he said the company may consider refinancing its May 2027 retail bond in coming months.
Walbridge reiterated FY2026 underlying EBITDA guidance of NZD 190 million to NZD 210 million and reported EBITDA guidance of NZD 170.6 million to NZD 190.9 million (including full-year B3 costs). He said the company has not seen a noticeable change in customer spending habits in January 2026 trading and expects greater second-half skew than previously outlined, driven largely by NZICC-related precinct benefits and cost savings, particularly in Adelaide.
SkyCity also guided to FY2026 capex of NZD 100 million to NZD 110 million. Fredricson said there is not expected to be “any significant” NZICC capex in the second half, aside from retentions to be paid in FY2027.
Walbridge also noted leadership changes, saying Fredricson will depart on March 1 and Blair Woodbury will join as CFO from March 9.
About SkyCity Entertainment Group (ASX:SKC)
SkyCity Entertainment Group Limited, together with its subsidiaries, operates in the gaming, entertainment, hotel, convention, hospitality, and tourism sectors in New Zealand and Australia. It operates through Skycity Auckland, SkyCity Adelaide, International Business, and Other Operations segments. The company operates integrated entertainment complexes that includes casinos, hotels, conventions, restaurants and bars, entertainment and attractions, day spas, tenpin bowling and wellness centres, car parking, sky tower, theaters, telecommunications and broadcasting facilities, and office/retail spaces located in Auckland, Hamilton, Queenstown, and Adelaide.
