The New Zealand-headquartered casino and hotel group told the ASX today that Adelaide Casino’s revenue was down 2.5 per cent to $148 million, excluding international business.
“Adelaide Casino’s performance declined primarily due to reduced visitation and disruption from the early works programme for the Riverbank Precinct impacting revenue, and increased marketing and promotional costs,” SkyCity said in a statement.
New general manager Luke Walker, appointed in February, was “introducing new strategic initiatives to improve the operating performance of the property”.
SkyCity announced last month that its long-awaited $330 million expansion of the Adelaide Casino will go ahead, including three new bars, three new restaurants, and a 123-room boutique hotel. The development, to be completed in 2020, will also focus on attracting so-called “high rollers” to premium gaming rooms.
Overall, SkyCity reported normalised net profit rose 1.3 per cent to $154.6 million in the year ended June 30 – slightly lower than analysts were expecting.
Normalised earnings before interest, taxes, depreciation and amortisation were down 2.6 per cent to $321.5m while normalised revenue was down 4.9 per cent to $1.03 billion.
Reported net profit fell 69 per cent to $44.9m, mainly on an $A95m ($NZ103m) impairment of Darwin goodwill following an annual impairment review.
SkyCity declared a final dividend of 10 cents per share, resulting in a total full year dividend of 20 cents per share.
It said the international business was adversely impacted by increased restrictions on fund transfers from China and a reduced number of visits from larger customers, in particular after the arrest of staff employed by its Australian rival, Crown Resorts, by the Chinese government.
Normalised ebitda was down 42 per cent to $19.6m while turnover for the full year was down 30 per cent to $8.7b. It said it remains confident in the medium term outlook for the business.
It said it expects group ebitda to “grow modestly” in the current financial year compared to the prior year.
It noted that the New Zealand International Convention Centre and Hobson Street hotel projects remain on-budget.
SkyCity Auckland – which accounts for around 80 per cent of group ebitda – achieved “modest revenue and earnings growth”.
It said that SkyCity Hamilton continues to “trade strongly” during the period.
It said its combined Queenstown operations remain “relatively modest” but represent an opportunity for future development.
In Australia, as well as the decline in performance in Adelaide, the group’s Darwin casino continued to face increased competition from pubs and clubs as well as a difficult economic environment in the Northern Territory.
The stock fell 3.7 per cent to $3.95 and has shed 17 per cent over the past 12 months.
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