SkyCity Entertainment Group, New Zealand’s only listed casino company, says first-half profit will fall as a rise in the New Zealand dollar crimps returns from its Australian businesses.
While it says its Adelaide Casino is experiencing a difficult trading environment, the company reported that the new Torrens footbridge gave visitor numbers a lift during the recent Ashes Test.
Normalised after-tax profit will probably be $NZ65 million ($A60.60 million) to $NZ68m in the six months ending December 31, the Auckland-based company said in a statement.
That’s lower than the $NZ72m profit in the year earlier period, excluding earnings from the Christchurch casino which was sold in December 2012.
The New Zealand dollar has accelerated away against its Australian counterpart, touching a fresh five-year high overnight, as a strengthening local economy contrasts with a slowdown in Australia.
SkyCity, which has four casinos in New Zealand and two in Australia, said an 18 per cent rise in the exchange rate would trim about $NZ3m from first half profit.
The New Zealand dollar bought 92 Australian cents in the current period, up from A78c in the year earlier period, the company said.
It touched a five-year high of A92.57c on Monday, and was recently trading at A92.27c.
Auckland, the company’s biggest operation, is expected to post “modest” growth in earnings before interest, tax, depreciation and amortisation, SkyCity said, without providing specific figures.
The company’s Adelaide casino is experiencing a challenging trading environment while its Darwin business is experiencing some cost pressure and will post a softer earnings margin in the first half.
“The South Australian economy has not shown any consistent signs of growth and, with the ongoing partial closure of the Adelaide Southern railway line due to electrification works, the property is experiencing a challenging trading environment,” SkyCity said.
“Having concluded the agreements with the South Australian government earlier this year and in readiness for the launch of Premium gaming, TITO and cashless gaming, the main floor and VIP rooms are being significantly upgraded at a cost of circa $40 million, with the development of the new premium Platinum and Pearl rooms and new Baccarat Pavilion, which will open from February 2014. These significant works are causing some short-term disruption to the gaming floors.
“Encouragingly, despite this disruption, during the recent Ashes Test at the newly redeveloped Adelaide Oval, the Adelaide Casino benefited from a substantial uplift in visitation facilitated by the newly opened Torrens River bridge.”
Meanwhile, in its other New Zealand units, SkyCity said Hamilton would post “softer” earnings in the first half even as the second quarter improved from the first quarter. Both of the company’s Queenstown casinos were refurbished in the half, it said.
In the company’s international business, the first half is expected to improve from the year earlier period, SkyCity said.
Full details on first-half earnings are scheduled for release on February 12.
– with AAP
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