Australian casino company Crown Resorts Ltd reported a net profit of AUD655.8 million (US$610 million) for the year ended June 30, a 65.7 percent rise from the previous year, as shares of its Macau joint venture Melco Crown Entertainment Ltd surged.
Normalised net profit after tax, which includes adjustments for expected win rates, was AUD640 million for the year, up 35.2 percent from AUD473 million the previous year, the company chaired by James Packer said in a regulatory filing on Thursday.
Crown’s earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 16.8 percent to AUD878.2 million.
After smoothing out the volatility in casino winnings, Crown’s share of Melco Crown Entertainment’s reported result for the year was an equity accounted profit of AUD287.6 million, up 64.3 percent year-on-year.
“Melco Crown Entertainment’s result was attributable to solid underlying financial performance, driven primarily by its mass market table games business at City of Dreams. However, market conditions weakened during the fourth quarter,” Crown said in the filing.
The Macau-based joint venture between Crown and Melco International Development Ltd, led by Lawrence Ho Yau Lung, last week reported net income for the second quarter of 2014 of US$143.6 million, down 20.7 percent from a year earlier.
“Overall, the results for the year were satisfactory, with improved trading in the second half in Australia and another strong year in Macau,” Rowen Craigie, Crown’s chief executive, said in a statement.
Crown declared a final dividend of AUD0.19 cents per share, to be paid on October 10, 2014.
Growing profits provide extra cash for the casino operator, as it works on projects and ventures in Australia and abroad, especially as the company said “weak consumer sentiment adversely impacted trading” at both Crown Melbourne and Crown Perth (pictured).
Crown is bidding for a new casino licence in Brisbane, Queensland, and on July 8 was awarded a licence for a new casino resort called Crown Sydney in the country’s largest city in the state of New South Wales.
The company said the property in Sydney would be operational “from November 2019 when gaming under the restricted gaming licence is permitted to commence”.
The casino operator last week announced it paid US$280 million for a site on the Las Vegas Strip. Construction for this project is expected to start late next year “with an opening anticipated as soon as 2018,” said U.S.-based Union Gaming Research LLC in a note on August 8.
In Thursday’s filing, Crown said it expects to have majority ownership of the Las Vegas scheme, paying between US$400 million and US$500 million, for a total investment of up to US$1.9 billion.
This is in addition to the expansion plans of Melco Crown Entertainment, in which Crown has a 33.6-percent stake. The Hong Kong-listed company is expanding the City of Dreams casino resort on Cotai and building Studio City, due to open in mid-2015.
Melco Crown Entertainment is also a partner in City of Dreams Manila, a project expected to open at the turn of the year.
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"If the [Macau casino] concessions are put up for bid, there will also be a lot of giant Chinese companies, some having nothing to do with gaming, which would like to take over these enormously successful casinos”
Professor emeritus at Whittier Law School in California, in the United States, and a visiting professor at University of Macau