Star Entertainment Group Ltd (ASX: SGR) shares are under pressure on Monday.
In morning trade, the struggling casino and resorts operator's shares are down 3% to 47.5 cents.
Why are Star Entertainment shares tumbling today?
Investors have been selling the company's shares again this morning after it released an update on its profit expectations for FY 2024.
According to the release, trading conditions have remained difficult since its last update in April.
The company notes that this reflects the challenging economic environment and cost of living pressures.
Group revenue for the fourth quarter of FY 2024 is expected to be 4.3% below the previous quarter and 3.3% below the prior corresponding period. This is being driven by revenue from Premium Gaming Rooms (PGRs) continuing to trend downwards, which is offsetting growth from Main Gaming Floor (MGF) revenue.
As a result, management expects group revenue for FY 2024 to be between $1,675 million and $1,685 million. This will be down from $1,868 million in the last financial years.
Unfortunately, it gets worse. Management notes that these conditions, together with elevated operating expenses from ongoing remediation and transformation activities, have had a big impact on its earnings.
Star Entertainment is forecasting FY 2024 normalised group EBITDA to be in the range of $165 million to $180 million. This represents a significant decline on FY 2023's normalised EBITDA of $317 million.
In response to this new operating environment, Star Entertainment will seek to expedite a range of initiatives to further reduce its operating cost base.
Leadership update
In a separate announcement, Star Entertainment has revealed that David Foster has ceased his executive responsibilities and resigned as a director with effect on 21 June 2024.
The company has progressed its recruitment process for a new permanent group CEO and managing director. It expects to make an announcement in the near term.
As an interim measure, Star Entertainment has appointed current interim group chief financial officer, Neale O'Connell, as acting CEO. This is subject to all requisite regulatory approvals.
This appointment is in addition to Mr O'Connell's existing duties as group CFO and will remain in place until the appointment of a permanent CEO takes effect.
The company's chair, Anne Ward, has also assumed additional responsibilities on an interim basis. She will continue performing these additional responsibilities until the appointment of a permanent CEO takes effect.
Star Entertainment shares are now down approximately 49% over the last 12 months.
