Neale O'Connell appointed acting CEO as Star Entertainment's FY profit falls
Australia’s Star Entertainment Group faced a tumultuous start to the week as its shares plummeted following a stark profit forecast for fiscal year 2024, prompting the appointment of an acting CEO amid ongoing challenges.
The casino operator anticipates its normalised group EBITDA for fiscal 2024 to range between A$165 million ($110 million) and A$180 million, marking a substantial decline compared to the previous year's figures. This forecast represents nearly half the profit estimate from fiscal 2023, underlining the significant financial headwinds confronting the company.
Shares of Star Entertainment dropped sharply by as much as 7.7% to A$0.453 in early trading on Monday, positioning the company as one of the biggest losers on the benchmark ASX 200 index (AXJO).
For fiscal 2023, Star reported a group revenue of A$1.87 billion and a group EBITDA of A$317.4 million, highlighting the stark contrast in financial performance anticipated for the current fiscal year.
The casino operator, grappling with financial strain, attributed the downturn to various factors including regulatory pressures and ongoing remediation efforts. Notably, Star has been under scrutiny to retain its gaming license for its Sydney casino amidst regulatory inquiries, adding further complexity to its operational challenges.
In response to these challenges, Star Entertainment announced the appointment of Neale O'Connell, the Interim Group Chief Financial Officer, as the acting CEO. This decision follows a series of management changes earlier in the year, culminating in the departure of Chairman David Foster in April.
Chairman Anne Ward has assumed additional interim responsibilities until the appointment of a permanent Group CEO and Managing Director. The company indicated that it is actively progressing with its recruitment process to fill these crucial leadership roles amidst the ongoing operational turbulence.
Moreover, Star Entertainment is actively exploring opportunities to enhance its financial position through strategic asset sales. The company is in negotiations for the sale of assets including its Treasury casino, hotel, and car park in Brisbane, while also evaluating the potential divestment of other non-core assets to streamline its operations.
The market's reaction to Star Entertainment's financial outlook underscores investor concerns about the company's ability to navigate regulatory challenges and restore profitability in a competitive market environment.
As the fiscal year progresses, stakeholders will closely monitor Star Entertainment's efforts to stabilize its financial performance and leadership structure amidst a backdrop of regulatory scrutiny and strategic repositioning efforts.