SkyCity interim profit dips on weak Australia operations

Tuesday 10th of February 2015

SkyCity Entertainment Group, which operates six casinos in Australia and New Zealand, has reported a small decline in net profit after tax in its results for the six months to the end of December 2014.

The earnings are in line with analysts’ predictions of a strong New Zealand result and of difficult conditions in Australia, where the company’s operations in Adelaide and Darwin have been affected by disruption due to rebuilding and a “challenging” trading environment respectively.

SkyCity reported normalized revenue of NZ$510 million ($377 million) in the six months to December 2014, up 9.2 percent on the previous period, normalized EBITDA of NZ$154.4 million ($114 million) up 3.1 percent and normalized NPAT of NZ$66.6 million ($49 million) up 0.3 percent.

Reported NPAT for the half year was NZ$54.6 million, down 10.6 percent on the previous corresponding period, primarily due to the below theoretical win rate in the International Business over the period of 1.04 percent. After a strong January 2015, the actual group-wide IB win rate is now above theoretical at 1.50 percent, the company said in its results announcement.

SkyCity’s Chief Executive Nigel Morrison told an analysts’ briefing that the company had had a strong January. “The interim results for FY15 are pleasing, with strong momentum in the Group’s core businesses,” he said.

In the previous six months, Auckland and International Business operations were strong, the Hamilton casino returned to profitability, the building programme in Adelaide came to an end, while operations in Queenstown returned an EBITDA of under NZ$500 000 although Darwin had improved to A$21.6 million ($16.8 million).

International Business doubled in turnover to $4.7 billion ($3.5 billion) in the six month period returning an improved EBITDA of $14.5 million ($10.7 million) – up 134 percent. Auckland operations improved normalized revenues to $302.5 million ($224 million) up 17 percent and EBITDA to $124.3 million ($92 million) up 15 percent.

In Adelaide, the $A50 million ($38 million) refurbishment has been completed. Normalized revenue increased 4.7 percent to A$73.1 million ($37 million) but normalized EBITDA (before branding project costs) declined 27.4 percent to A$13.5 million ($10.5 million).

The company is paying a steady 10 cents interim dividend.