GGRAsia – Crown’s Craigie out, casino VIP turnover dips 1H fiscal

Crown’s Craigie out, casino VIP turnover dips 1H fiscal

Feb 23, 2017 Newsdesk Latest News, Top of the deck, World

Australian casino operator Crown Resorts Ltd announced on Thursday that its chief executive and managing director Rowen Craigie is to step down on February 28 after more than 23 years of service with the group, including nearly a decade in that senior role.

His responsibilities will be assumed by executive chairman, John Alexander, said a filing to the Australian Securities Exchange. The document said Mr Craigie would continue to act as a consultant to Crown Resorts, “as required, on specific projects”.

The same day, the group had announced turnover from its VIP gambling operations in Australia had plunged 45.3 percent year-on-year in the six months ending December 31, to AUD19.6 billion (US$15.1 billion).

It contributed to half-year group net profit after tax – and as attributable to the parent – falling 10.8-percent, to AUD182.8 million.

“Revenue across Australian resorts declined by 12.5 percent as a result of trading conditions, primarily due to VIP,” said a Thursday note from JP Morgan.

“Main gaming floor decreased by 0.8 percent with Melbourne’s strength (up 0.5 percent) offset from Perth’s weakness (down 4.0 percent),” wrote the investment banking group.

In October – during the reporting period – a number of Crown Resorts employees, including Jason O’Connor, executive vice president VIP international – were detained in mainland China. The country’s Ministry of Foreign Affairs said at the time they had been held in relation to alleged “gambling crimes”. Mr O’Connor was subsequently formally arrested and held.

Crown Resorts has been known in the regional casino industry for its strength in VIP gambling business, drawing customers from neighbouring Asia Pacific countries – including China – to its property in Melbourne, Victoria (pictured), and its venue in Perth, Western Australia.

Neither the announcement of Mr Craigie’s impending departure – nor the half-year results – mentioned the China incident. Mr Alexander did however refer in some commentary on the half-year numbers, to “difficult trading conditions”.

‘Gambling crimes’

But The Australian newspaper reported on Thursday that when Mr Alexander was asked about the China situation at a media briefing that day, he replied: “We look at that as a pause rather than a retreat. There is no intention to retreat from the market on where we stand as a six-star hotel provider.”

Chief financial officer Ken Barton added that the group needed to get “clarity on what is the issue in relation to the detentions”.

Mr Alexander reportedly stated: “Nothing has changed from what we know and what we have told the market. We have no greater clarity. We have to wait for those legal processes to take their course … We are all in the hands of the Chinese legal process.”

An October 17 note from brokerage JP Morgan Securities (Asia Pacific) Ltd mentioned that the Chinese government had previously pledged to “crack down on ‘foreign’ casinos setting up offices to attract Chinese gamblers and fight against ‘overseas’ gambling-related crimes”.

Crown Resorts’ Australian market rival The Star Entertainment Group Ltd said in its half-year results on February 16 that “uncertainty” generated by the detention in China of Crown Resorts people had had a “significant impact” on its own VIP business, which taps regional markets – including China – for players.

There was some good news on Thursday for Crown Resorts investors. The group declared an interim dividend of AUD0.30, and a special dividend of AUD0.83. They are payable on March 17.

Crown Resorts’ share of Asian casino developer Melco Crown Entertainment Ltd’s net profit after tax was AUD37.9 million, up 303.2 percent year-on-year.

Following a series of sell downs by Crown Resorts regarding its interest in Melco Crown, the Australian firm now holds 11.2 percent of the Asia-focused entity, Crown Resorts confirmed on Thursday.

“As a result of the Melco Crown sell down transactions, Crown [Resorts] will no longer equity account the results of Melco Crown,” said the Australian group. Entrepreneur James Packer is a major shareholder in Crown Resorts.