Turn of the card eats into Crown's profit
SOMETIMES the house doesn't win.
Although only a pittance compared with the $1.5 billion in revenue recorded for the first half, up 1.1 per cent for the period, or the near $31 billion in turnover generated by its VIP patrons in the six months to December, the luck of the gambler did hurt Crown's bottom line.
James Packer's company, which owns casinos in Melbourne, Perth, London and Macau and is trying to muscle its way into the Sydney market, on Friday reported its interim profit fell by 34.1 per cent to $180.775 million.
If lucky gamblers weren't annoying enough, the sharemarket wasn't too kind to Crown either, with a fall in Echo Entertainment's share price triggering a mark-to-market loss of $52 million on Crown's 10 per cent investment in the rival casino group. Mr Packer could learn soon if Crown will be granted a casino licence for its mooted $1 billion Barangaroo project.
Stripping out the lucky streak by some gamblers at its Melbourne and London betting tables and other significant items such as its Echo play, Crown Limited posted a 15.1 per cent increase in normalised net profit to $243.5 million.
Chief executive Rowen Craigie said the VIP market at casinos in Macau and Singapore had picked up towards December after a quiet start. "The Melbourne result is a bit reflective of what was happening in Macau and Singapore," he said.
Mr Craigie said the overall first-half results for Crown's Australian casinos were "reasonable" given disruption caused by refurbishments, particularly the expansion in Perth.
Normalised pre-tax earnings at Crown Melbourne rose 8.4 per cent to $291.9 million while non-gaming earnings (food, beverages, conferences and hotel) rose 3.3 per cent to $204.4 million. At Perth, normalised earnings lifted 5.4 per cent to $122.9 million. Non-gaming earnings increased 9.3 per cent to $108.4 million.
Chief financial officer Ken Barton said it was hard to pinpoint an exact day or the VIP players that swung Crown Melbourne's theoretical win rate below the previous period's level of 1.5 to 1.23 in the first half of 2012-13. "It's $24 billion of volume [business] and it will be a series of days and a series of players. No individual would be big enough to significantly move that dial on that level of turnover."
Mr Barton said since Crown's opening 16 years ago the theoretical win rate has been 1.35 per cent.
"Long-term we have been mostly above that, there have been periods like the last where we have been below."
Mr Craigie could not provide commentary on trading due to the timing of Chinese New Year and the impact of that on Crown's VIP customers. "We're halfway through our traditional Chinese New Year visitation period, so I think when we're through that we'll have a better sense of how the second half is looking," Mr Craigie said.
Crown shares rose 20¢ to $11.75.