21-05-2025
Strong performance doubles Southern Sun's dividend and occupancy reverts to normal levels
Southern Sun Elangeni & Maharani A view from the Southern Sun Elangeni & Maharani in eThekwini. Lower event activity in the Durban International Conference Centre negatively impacted the occupancy of the group's hotels in the city in the year to March 31.
Image: Supplied
Southern Sun doubled its dividend after lifting adjusted headline earnings per share a sturdy 34% to 75.6 cents for the year to March 31, following strong growth in the Western Cape and in Gauteng.
Income was up by 9% to R6.6 billion. Occupancy increased by 2.2 percentage points to 60.8%. Net debt reduced to R266 million. A 25 cents a share dividend was declared.
The refurbishments of Southern Sun Cullinan and Sandton Towers – reopened in July 2024 and December 2024, respectively – along with upgrades to the restaurant and rooms at Southern Sun Rosebank and Southern Sun Sandton, were well received by the market, directors said.
These improvements contributed to increased occupancy and rate growth in Cape Town and Gauteng during the latter half of the financial year.
The 12% increase in operating profits, with finance cost savings, resulted in a 30% increase in adjusted headline earnings for the year to R1bn.
'The cost restructuring in 2021 enabled the group to deliver 14% EBITDAR (earnings before interest, tax, depreciation, amortisation, and restructuring), from 9% income growth,' the group directors said.
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Total income comprised room revenue growth of 10% to R4.4bn, supported by average room rate growth of 5% and the increase in occupancy.
Food and beverage revenue increased 6% to R1.6bn in line with occupancy growth, property rental income has grown by 19% to R272m, while other revenue has increased by 7% to R330m.
The recovery of occupancies to the group's long-term average, especially in regions that had underperformed in the current year, presents an opportunity in the medium term, directors said.
However, some regions hindered overall performance in the past year, particularly KwaZulu-Natal and Mozambique.
In South Africa, corporate and leisure bookings rebounded after the May 2024 elections, but government demand outside of G20-related events was slower to recover. There were signs of improvement in the third quarter, but activity slowed again in the last quarter due to the uncertainty surrounding the approval of the national budget.
Additionally, reduced event activity at Durban International Convention Centre negatively impacted the group's hotels in Durban, although trading in Umhlanga remained stable.
In Mozambique, political unrest and rioting in Maputo since November 2024 significantly affected demand at the Southern Sun and StayEasy hotels.
Although this situation stabilised after the inauguration of the president in January, 2025, and supported by the fact that the hotels are in a secure zone surrounded by embassies and security forces, occupancy levels continued to lag.
'The group intends to maintain the dividend payout ratio, and in the absence of major expansion capex, will continue to apply available cash resources towards share buybacks when appropriate,' the directors said.
A 3% reduction in the weighted average number of shares reflected the impact of the share buyback implemented in 2024.
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