Tsogo Sun swings into full-year loss amid COVID-19 crunch
Tsogo Sun has released preliminary results for the year ended March this year, and the company has swung to a loss. Tsogo sun has reported headline loss of 63.5 cents but has also managed to reduce debt by R183 million. The company and many others in the hospitality industry are among those hardest hit by Covid-19. It says it’s clear that the recovery of the hospitality industry will be long and slow. Tsogo Sun CEO, Marcel von Aulock joins CNBC Africa for more.
Thu, 27 May 2021 11:08:42 GMT
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AI Generated Summary
- Impact of COVID-19 on Tsogo Sun's financial results and operations
- Employee layoffs and salary cuts due to reduced business activity
- Strategies to reduce debt, maintain liquidity, and focus on domestic travel for recovery
Tsogo Sun, one of South Africa's leading hospitality companies, has faced a challenging year due to the COVID-19 pandemic. The company reported a headline loss of 63.5 cents, highlighting the severe impact of the restrictions on the hospitality industry. Marcel von Aulock, the CEO of Tsogo Sun, joined CNBC Africa to discuss the company's financial results and the road to recovery. Von Aulock outlined the significant costs the company had incurred during the pandemic, with an EBITDA loss of 170 million in the first quarter of the previous year. The lack of international travel and corporate activity has led to a slow recovery, with Tsogo Sun currently trading at only 30-40% of normal volumes.
The impact on employees has been profound, with the company restructuring and many employees earning only a fraction of their salaries due to reduced work shifts. Tsogo Sun has had to let go of around 2,000 employees, reflecting the devastating impact on the hotel industry. The CEO highlighted the challenges of being on the UK's red list for international travel, limiting foreign visitors and airline activity. Von Aulock stated that the recovery process for the hospitality industry would be gradual, with hopes for a return to normalcy by the end of 2021.
Despite the financial losses, Tsogo Sun managed to reduce its debt by R183 million through asset sales and cost-cutting measures. The company remains focused on liquidity and maintaining a strong balance sheet to weather the ongoing challenges. Von Aulock emphasized the importance of domestic travel in sustaining the business, noting that urban markets and leisure destinations have shown resilience.
Looking ahead, Tsogo Sun is banking on the British and Irish Lions tour in July to boost activity and kickstart the recovery. The CEO projected a slow but steady return to pre-pandemic levels by the first quarter of 2022. While international travel remains a key driver for the company, local leisure demand has been a lifeline during these tough times. Von Aulock underscored the need for reevaluating infrastructure development to align with changing travel patterns and emphasized the importance of adapting to both local and international demand in the post-pandemic era.
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