Australia’s largest private childcare centre operator, G8 Education, is planning to close up to 40 centres – nearly 10 per cent of its local operations – in response to an ongoing occupancy slump, rising costs and the fallout from last year’s childcare sex abuse scandal.
Ahead of its shareholder meeting in Brisbane on Wednesday, G8 told investors it will suspend operations at around 40 underperforming centres while it considers “longer-term options for those centres including lease surrender, divestment or other alternatives”.
The group has yet to report which centres face closure.
G8 is not expecting a quick recovery from a slump which has seen occupancy across the childcare sector drop compared to 2024 and 2025. The group blames sustained affordability pressures, falling birth rates, rising supply of long day care, but also “confidence being impacted by serious child safety incidents”.
“While the operating environment means G8 Education does not expect a material recovery in occupancy relative to pcp [prior corresponding period] this year, we will continue to review and adjust the operating model and cost base of the Group where appropriate,” G8 chief executive Pejman Okhovat said.
The company’s shares slumped to a 16-year low of 16.5¢ and have dived more than 87 per cent over the last year after charges were laid against accused paedophile Joshua Brown over alleged sexual abuse of children in his care at centres in Victoria. These included G8 Education centres.
The Wednesday update confirms that an alarming exodus from the operator’s centres has continued. At the same time, the company is getting hit with soaring regulatory and compliance costs in response to the scandal, which include installing CCTV across its centres.
As of April 24, G8 said spot occupancy levels at its centres was 56.4 per cent, down 7 per cent compared to the prior period, while year-to-date occupancy dropped 7.9 per cent to 56.1 per cent.
“In response, G8 Education has proactively assessed its network to ensure we remain sustainable, resilient and well positioned to continue delivering safe, high quality early education and care over the long term. We have carefully considered where our resources can be most effectively allocated to support quality early education and care outcomes,” Okhovat said.
RBC Capital analyst Wei-Weng Chen said this level of decline in occupancy would typically result in a $40 million impact to earnings before interest and tax (EBIT) on an unmitigated basis.
“None of G8’s mitigation steps announced are quantified, so at present it is difficult to accurately ascertain the full earnings impact,” he said.
G8 is losing the support of investors too.
Earlier this year, Vision Super sold out of the childcare operator and put the company on its excluded investments list, alongside tobacco companies and weapons manufacturers.
“The media coverage of the incidents at G8 Education has been deeply disturbing,” said Michael Wyrsch, the super fund’s chief investment officer.
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Colin Kruger is a senior business reporter for the Sydney Morning Herald and The Age.Connect via email.
