Tsogo Sun Gaming Weakened After Ouster of South Africa's Gordhan

(Bloomberg) -- Tsogo Sun Holdings Ltd. said its South African casino business suffered last month as the firing of Finance Minister Pravin Gordhan weakened consumer confidence, leading to many gamblers staying at home.

“March was a good month for us, but April was very tough,” Chief Executive Officer Marcel Von Aulock said in a phone interview on Wednesday. “We put a lot of that down to a change in sentiment in the South African economy.”

The owner of Johannesburg’s Montecasino and Gold Reef City entertainment complexes expects earnings growth to track the economy, and sees no sign of a pick-up because of internal fighting within the ruling African National Congress, the CEO said. The continent’s largest gaming and hotels company is “extremely well placed” for an eventual upturn, having added betting machines to venues and bought new properties, he said.

South African President Jacob Zuma ousted Gordhan in a cabinet reshuffle at the end of March, causing the rand to weaken and bond yields to rise. Both S&P Global Ratings and Fitch Ratings Ltd. subsequently downgraded the country’s credit rating to junk, citing uncertainty over policy continuity and political instability. Africa’s most industrialized economy is expected to grow 0.8 percent this year, compared with the sub-Saharan African average of 2.6 percent, according to the International Monetary Fund.

Tsogo Sun shares fell 1 percent to 24.30 rand as of 9:50 a.m. in Johannesburg, extending the 2017 decline to 12 percent. That values the company at 25 billion rand ($1.9 billion).

Sales rose 8 percent to 13.2 billion rand in the year through March, lifted by a 28 percent increase in hotel revenue, the Johannesburg-based company said in a statement. Revenue from gaming after paying out winnings, known as the gaming win, grew by a “disappointing” 2 percent during the year, Tsogo said.

Earnings per share excluding one-time items increased 6 percent. Tsogo Sun raised the 2017 dividend by 6 percent to 1.04 rand a share.