$17m to $22m SkyCity cost-out charges expected in FY27

SkyCity keeps FY27 outlook despite subdued consumers

SkyCity Entertainment Group Limited (ASX:SKC; NZX:SKC) has held its FY27 earnings outlook, saying first-quarter trading was consistent with the final quarter of FY26. Revenue is tracking in line with expectations and the cost-saving programme is ahead of schedule, with around one-quarter of its targeted annual benefits already delivered.

The update came with a familiar qualification: consumer conditions remain subdued in both New Zealand and Australia, while the timing of SkyCity’s entry into the regulated New Zealand online casino market is still unresolved. The company is therefore not issuing formal FY27 guidance, despite reiterating the outlook provided with its August FY26 results.

Cost savings arrive before one-off charges

SkyCity is targeting $30 million of realised cost benefits in FY27, rising to $70 million in FY28. The programme includes a reorganisation affecting almost 250 roles, mainly in corporate and back-of-house functions, as well as supplier savings, technology investment and new growth initiatives.

That benefit will not flow cleanly through reported earnings. One-off change costs associated with the programme are expected to total between $17 million and $22 million in FY27, alongside further costs linked to the B3 programme and the sale of The Grand Hotel. The company expects capital expenditure to sit around the midpoint of its previously stated $80 million to $100 million range, with a further $30 million committed to the rights to apply for two online casino licences.

Asset sales target lower debt and dividend return

SkyCity said its asset monetisation programme is expected to generate close to $300 million in gross proceeds by December 2026, including the conditional $221 million sale of The Grand Hotel. The company said the proceeds are expected to help reduce net debt to around 2.0 times underlying EBITDA by the end of FY27, including the cost of the online casino licences. That balance-sheet reset builds on the August equity raise, which raised $240 million through a fully underwritten entitlement offer.

The board says it aims to resume dividends in FY28 once capital management and operating objectives are achieved. That remains a conditional target rather than a commitment, with debt reduction, cash flow improvement and operating performance still to be delivered.

Adelaide sale process adds another moving part

SkyCity has also begun a formal sale process for its Adelaide business after reaching a non-binding heads of agreement with South Australia’s Minister of Consumer and Business Affairs. The proposed resolution includes an A$21 million fine and required governance and operating standards. The process follows the Adelaide licence review, which had reported no impairment to the casino licence.

There is no certainty that the Adelaide process will produce a transaction. Meanwhile, SkyCity is progressing applications for its two online casino licences and expects the market to launch in the second half of FY27, although the timing remains undetermined. The NZICC, which opened in February, hosted 141 events and more than 100,000 visitations in its first months, with the company expecting more than 350 events and 350,000 visitations across FY27.