Shares in SkyCity Entertainment Group Ltd (ASX: SKC) are sliding on Thursday after the casino operator released its interim results.
At the time of writing, the SkyCity share price is down 5.33% to 71 cents. The stock is now hovering near the lower end of its 52-week range, reflecting a tough year for shareholders.
Here's what the company reported for the 6 months ended 31 December 2025.
Image source: Getty Images
Revenue dips and earnings fall
SkyCity delivered group revenue of $411.7 million, down 2.4% on the prior corresponding period.
Underlying EBITDA came in at $85.5 million, a decline of 28.4%, while underlying net profit after tax (NPAT) fell 67.5% to $14.4 million.
On a statutory basis, reported net profit after tax was $12.1 million, up from $6.1 million a year ago, largely due to one-off items in the prior period.
Management said the result reflects a "transitional" half, with regulatory changes, cost pressures, and investment weighing on margins.
No interim dividend was declared.
Regulatory changes and higher costs dent earnings
A major change during the half was the rollout of mandatory carded play across SkyCity's New Zealand casinos from July 2025.
While management says this supports long-term sustainability and provides better customer data, it had a short-term impact on gaming revenue and EBITDA per visitation.
The company also flagged higher compliance costs, including continued investment in anti-money laundering systems and host responsibility frameworks.
In Adelaide, earnings were affected by compliance-related costs, gaming tax, and legal matters. Management confirmed a carded play system is expected to be implemented there from December 2026.
Convention centre opens as debt levels stay in focus
There was one major milestone during the period. The New Zealand International Convention Centre officially opened in February, with strong forward bookings for FY26 and FY27.
SkyCity expects the convention centre to support improved performance in the second-half, alongside cost-out initiatives and the absence of some one-off costs.
On the balance sheet, total net debt sits at $594 million, with net debt to EBITDA of 2.83x. The group said covenant ratios remain within banking limits.
Average debt borrowing costs fell to 5.4%, and liquidity headroom remains solid, with more than $340 million in funding headroom.
What's the FY26 outlook?
SkyCity reaffirmed its FY26 guidance, originally provided in August and reconfirmed at the annual general meeting (AGM).
The company expects:
• FY26 underlying EBITDA of $190 million to $210 million
• Reported EBITDA of $170 million to $190 million
• No dividends to be paid in FY26
Management said FY26 will continue to be a transition year as it finalises key projects and navigates short-term headwinds. The goal is to reset the business and lay the groundwork for improved earnings beyond FY26.
The company is also preparing for the potential launch of online casino gaming in New Zealand, which could go live from December 2026, pending regulatory approval.
Foolish takeaway
SkyCity's half-year result was broadly in line with expectations, but earnings still remain under pressure.
With no dividend and debt still sitting high, it's not hard to see why the share price has slipped.
