Crown issues profit warning despite lucky streak
JAMES Packer's casino operation, Crown Ltd, reported a 53 per cent increase in net profit to $513.3 million for the year to June 30, largely thanks to a winning streak against its VIP gamblers. But the company tempered the better than expected result with warnings of higher costs and subdued consumer spending.
JAMES Packer's casino operation, Crown Ltd, reported a 53 per cent increase in net profit to $513.3 million for the year to June 30, largely thanks to a winning streak against its VIP gamblers. But the company tempered the better than expected result with warnings of higher costs and subdued consumer spending.Despite experiencing the same second-half slowdown in high-roller activity recorded in Singapore and Macau, Crown said an above-theoretical-win rate against the VIPs delivered close to $100 million extra in underlying earnings at its Melbourne and Perth casinos.On a normalised basis, the company said net profit increased 22 per cent to $415 million.Crown's Macau joint venture, Melco Crown, also continued to be a strong contributor to earnings delivering a $135.8 million equity-accounted profit but its normalised contribution was $92 million.In Australia, Crown said it felt the impact of softening activity in the second half on the main gaming floor and in non-gaming areas, which it blamed on a mix of weak consumer sentiment and the disruption from its $2 billion refurbishment program.Chief executive Rowen Craigie described the results for Crown in Melbourne and Perth's Burswood casino as mixed."During the year, we saw reasonable revenue growth at both properties, although in some areas this was offset by higher operating costs," he said.Crown Melbourne was the main culprit with normalised earnings up 1 per cent for the year to $510.6 million, while its Perth casino reflected the stronger consumer sentiment out West and a better VIP performance with normalised earnings at Burswood up 16 per cent to $226 million.Crown also recognised the $20.1 million gain for the year ending June 30 on the stakes it held in Tabcorp and Echo.It said it had "substantially reduced" its economic interest in Tabcorp and expected to completely unwind the stake "in short order". It acquired a 4.9 per cent economic interest before Tabcorp demerged its own casino operations, Echo Entertainment.