Trading Day – Montecasino-owner under pressure, De Beers diamond sales plunge

The gaming, hotels, and entertainment group Tsogo Sun saw a moderate 1.6% increase in revenue to R11.5 billion but a significant drop in profit. Higher operating expenses, load-shedding, and inflation have made it more difficult for the company to remain profitable.

Stefanutti Stocks reported a 17% increase in revenue from continuing operations for the financial year. The company is undergoing an asset disposal program and is pursuing a number of contractual claims and compensation events on the Kusile Power Station.

Anglo American’s rough diamond sales dropped to an estimated $380 million (R6.98 billion) for the fourth sales cycle of 2024. This represents a 21% drop from the fourth sales cycle in 2023 and a 15% drop from the third sales cycle of 2024 ($446 million).

Investec showed strong financial results, with revenue increasing 20.9% for the 2023/2024 financial year.

Here is the biggest investing news of the day so far –

• Montecasino-owner Tsogo Sun saw a 1.6% increase in revenue to R11.5 billion. The company released its results for the year through March 2024. Gaming revenue, making up 84% of total revenue, only saw a small increase of 0.5%, with revenue from rooms increasing by 4.3%. Revenue for food and drinks increased by 9% to R648 million. Operating expenses increased more than revenue by 3.6%, pushing profitability down. Net profits, therefore, fell by 12.3% to R1.5 billion. The group improved its financial position by lowering its interest-bearing and lease liabilities by 4.2%. However, higher operating expenses kept its debt-to-EBITDA ratio constant at 2.35. Tsogo said inflation and load-shedding have had a negative impact on income. The group is in the process of implementing solar power, which will continue in the 2025 financial year. Developments within the digital space, including the Tsogo Sun App and online betting, remain a priority for the group and have proved to be lucrative. 

• Stefanutti Stocks’ revenue from continuing operations increased by 17.1% to R7.1 billion, and net profit fell by 47.2%. The construction group reported its results for the year that ended 29 February 2024. The company is undergoing a significant asset disposal program to dispose of non-core assets and underutilised equipment in light of substantial liquidity hurdles. It is in the process of claiming at least R1.6 billion from Eskom due to work done on the Kusile Power Station. 

• Anglo American reported rough diamond sales dropped by 21% to $380 million (R6.98 billion). The group reported its provisional results for 2024’s fourth sales cycle. $479 million (R8.81 billion) of rough diamond sales were reported in the fourth sales cycle of 2023. The results are testimony to lower demand for mined diamonds amid rising production of lab-produced diamonds. De Beers CEO Al Cook said, “As expected, De Beers’ rough diamond sales in the fourth cycle of the year trended lower, in line with the seasonally slower second quarter and a quieter period of trading in India during the elections. The focus of the global diamond industry now turns towards the JCK jewelry show in Las Vegas at the end of May. Demand trends in the US are expected to be driven by short-term macroeconomic issues but supported in coming years by a recovery in engagements as the after-effects of pandemic lockdowns fade.”

• Investec’s revenue increased by 20.9%. The company released its unaudited results for the year that ended 31 March 2024. Revenue increased by 5% in GBP terms to £2.1 billion, translating to a 20.9% increase in rand terms. Net profit per share increased by 29% in constant currency terms from 85.8 pence per share to 105.3 pence per share. Investec expects its revenue momentum to continue in 2025. 

It remains to be seen how these events will affect these companies and shareholders in the long term.