Crown profit up on Melco stake sale, VIP gaming down
Australian casino company Crown Resorts Ltd on Friday reported net profit of AUD1.87 billion (US$1.49 million) for the year ended June 30, up by 96.7 percent from the preceding fiscal year, despite a decline in revenue for the period.
The increase in profit was supported by an AUD1.75 billion gain from the disposal of its stake in Asian casino developer Melco Resorts and Entertainment Ltd, in a series of sell downs completed in May, the firm said in a filing to the Australian Securities Exchange.
Without the one-off gain, net profit on a normalised basis for the year would have been AUD343.1 million, down 15.5 percent year-on-year, the company said.
Crown Resorts, controlled by billionaire James Packer, said group-wide revenue for the 12 months ended June 30 declined by 7.5 percent year-on-year, to AUD3.34 billion, due to a decrease in gaming revenue, particularly in the VIP segment.
The casino firm reported revenue from VIP play of AUD605.3 million, down 39.7 percent from the previous fiscal year. The company said main gaming floor revenue fell by a more modest 1.4 percent, to AUD1.66 billion.
“Crown’s Australian operations’ full year result reflected difficult trading conditions,” said the firm’s executive chairman, John Alexander, in a statement.
“Total normalised revenue across Crown’s Australian resorts declined by 12.7 percent,” said Mr Alexander, adding that the decline “was due primarily to the reduction in VIP programme play revenue in Australia”.
Crown Resorts’ annual results were hit by the downsizing of the company’s international operations, following the arrest of a number of its employees – including Jason O’Connor, executive vice president VIP international – in mainland China last October.
Sixteen of the 19 employees from Crown Resorts detained last year were given jail sentences by a Shanghai court in June, based on allegations of gambling-related crimes. Ten of these employees have meanwhile been released from detention, since their sentences were backdated to October 2016.
Crown Resorts had been known in the regional casino industry for its strength in VIP gambling, drawing customers from neighbouring Asia Pacific countries – including China – to its property in Melbourne, Victoria, and its venue in Perth (pictured), Western Australia.
Reuters news agency reported on Friday that when Mr Alexander was asked about the link between the China arrests and the decline in VIP play on a conference call with analysts, he replied: “We don’t intend to make any more comments about China”, adding that the company was reviewing its business model.
On Friday, the Australian firm confirmed that it would no longer pursue the Alon casino and hotel project on the Las Vegas Strip, recognising an impairment loss related to that investment in the reporting period.
Crown Resorts declared a final dividend of AUD0.300 per share to be paid on October 6, compared to AUD0.395 per share in the prior-year. The company also said it would buy back another 29.3 million shares, after completing an initial AUD500 million on-market share buy-back in June 2017.
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