Star owner bets on Qld growth plan
Casino operator Echo Entertainment will push ahead with a reinvestment plan for its Queensland venues, despite weak consumer sentiment hitting the state.
The operator, which has been in discussions with the Newman government on developing its Treasury casino site, said expanding its Brisbane and Gold Coast venues was a key focus for this current financial year.
Echo reported an underlying profit of $126.9 million for the year to June 30, down 15.5 per cent from a year earlier.
This was adjusted from a statutory profit of $83.5 million to reflect changes in the way it calculates the win rate of games in its VIP segment.
The company said it was affected by subdued trading conditions in Queensland, with revenue from its poker machine business sliding below expectations. It said redevelopment of the Brisbane and Gold Coast sites would help boost the value of its assets.
"While recent trading has been challenging in Queensland, we remain committed, positive and engaged on the underlying potential of these new assets and share the Newman government's vision for tourism," chief executive John Redmond said.
"We continue to work collaboratively with the government to help develop those plans."
Echo is facing a fight for revenue with James Packer as a slowing economy weighs on gambling spending, driving gaming tax revenue down in the three months ended March from the previous quarter.
The company's shares have slumped since July 4, when Crown moved a step closer to winning approval for a rival casino in Sydney's Barangaroo, adjacent to Echo's Star complex, hitting a record low closing price of $2.53 on August 7.
Mr Redmond told analysts in a briefing the company was focused on how to compete with the new Crown development.
"We will be spending time this year dealing with what we are going to do with our business here, the Star, to address what the environment is going to be like post-2019," he said. The company posted a final dividend of 2¢ a share, fully franked.
"Competition is set to intensify in Sydney," Mark Bryan, an analyst at Bank of America's Merrill Lynch unit in Sydney, wrote in a note to clients on July 29.
There were "headwinds in domestic gaming" as a result of weakness in Australia's consumer sector, he said.