Wed, Aug 9, 4:59pm by Staff Writer
With the release of Crown Resorts’ full year results, covering the fiscal year ending June 30, the company confirmed financial analysts’ worst fears.
Using the normalised net profit after tax (NPAT) metric – which casino operators use to provide greater clarity while weeding out shifting win rates – Crown Resorts collected $343.1 million.
That marks a 15.5 percent reduction compared to last year’s NPAT of $406.2 million, and falls short of the $369.1 million prediction forecasted by averaging the 10 analysts polled using Thomson Reuters I/B/E/S estimates.
John Alexander, who serves as executive chairman for Crown Resorts, issued a statement addressing the declines:
“Crown’s Australian operations’ full year result reflected difficult trading conditions.
Total normalised revenue across Crown’s Australian resorts declined by 12.7 per cent. This decline was due primarily to the reduction in VIP program play revenue in Australia, which was down 48.9 per cent on the prior comparable period.
Main floor gaming revenue also decreased by 1.4 per cent with Melbourne flat and softness in Perth.”
As Alexander observed, Crown Resorts saw its share of the casino industry’s lucrative VIP market cut nearly in half. The company attributed $33.3 billion in turnover to VIP patrons – primarily high-stakes players visiting from China – down 48.9 percent year-on-year.
The decline coincides with Crown Resorts now infamous imbroglio in Macau, after 19 of its employees – including three Australian citizens – were arrested and jailed on charges of promoting illegal gambling. The arrests were connected to the Chinese government’s ongoing crackdown on the flow of gambling funds from the mainland to foreign shores – typically to Australia’s luxury casino chains operating both domestically and in Macau.
With the release of the last remaining prisoners from that case imminent, Alexander was asked about Crown Resort’s plans for the Macau market by the Sydney Morning Herald. But as Jason O’Connor, the company’s head of international VIP operations, remains in custody, Alexander remained predictably opaque on the sore subject:
“Until this is finally resolved, we are basically stepping back from an aggressive position in their market.
We are going to sit down and figure out the long-term position.
We don’t intend to make any more comments about China.”
Within the recently released financials, Crown Resorts reported a net profit of approximately $1.7 billion from the sale of Melco Resorts & Entertainment (MRE). Until the arrests, MRE had been the vehicle for an ambitious Macau expansion plan spearheaded by Crown Resorts mogul James Packer.
Despite the precipitous drop in normalised NPAT, the billion-dollar sale of MRE allowed Crown Resorts to post a reported profit of $1.86 billion – the bulk of which came from the single “significant item.” That figure represented a 96.7 percent increase in reported NPAT year-on-year.
One day before the full year results were released, Crown Resorts officially welcomed Packer back to the company’s Board of Directors.
Asked about Packer’s return, Alexander told the Sydney Morning Herald that the billionaire – who stepped down as Chairman of the company in 2015 – was fully committed:
“Mr. Packer is very involved in the business.
This is his primary asset and he is very much engaged.”
Alexander also addressed concerns that shortfalls in VIP revenue may affect Crown Resorts’ planned multibillion-dollar casino resort in the Sydney suburb of Barangaroo.
The venue – which is expected to be completed in 2021 – has been billed as a VIP-centric destination catering to high-rollers, and Alexander said that would continue be the case:
“We think Sydney will be an outstanding property and a great success on many fronts, including the VIP.”
Crown Resorts saw VIP revenue fall across both its primary domestic locations.
At Crown Melbourne, normalised VIP revenue totalled $340.3 million – down 49.7 percent year-on-year. Crown Perth fared no better, at $109.3 million and down 46.1 percent.
With the Aussie Millions coming to an end last week, all eyes turn to the annual US Poker Open at the Aria…
The Victorian Responsible Gambling Foundation has reported on recent changes that allow Victorian hotels and clubs to provide cashless gaming to their…
A report by the ABC has revealed that dozen of Woolworths pubs are being investigated over claims staff illegally gave free drinks…