Barton upbeat on long term
A softening in the Chinese economy has caused its high rollers to put the brakes on big spending at the gaming tables. That’s causing anxiety among casino operators who rely on those VIPs to replenish its coffers.
According to the Sydney Morning Herald, China’s slowest growth rate in 30 years has caused a drop in notable VIP gaming revenue in Australia’s casinos.
Exacerbating the problem is Beijing’s ongoing crackdown on conspicuous consumption and trade tensions with the United States. On February 20, Australia’s largest casino operator, Crown Resorts, told that VIP turnover declined 12.2 percent to $19.9 billion in the six months to December 31. At Crown Melbourne, turnover from foreign VIPs was down 11.2 percent to $17.3 billion.
Crown’s normalized after-tax profit rose less than 1 percent to $194.1 million, Crown said, missing Macquarie Research first-half forecast of $203 million and JPMorgan’s projected $221 million. “Overall, the result missed on softer-than-expected VIP within the Australian casinos,” Macquarie senior gaming analyst David Fabris said. Crown shares dropped more than 5 percent on the news to $11.55.
Fabris told the Herald that growth could decline by another 16 percent for the second half of the financial year “as China macro looks to be challenging, and domestic growth looks to be low.”
Crown Chief Financial Officer Ken Barton said the slump is affecting casinos in Macau, Singapore and throughout the Asia-Pac region. “It’s indicative of what we’re seeing across the VIP market more broadly,” he said. He added that longer-term, “it’s still a very substantial VIP market. There’s a lot of wealth in China. Wealth continues to grow, there is more affluence in China traveling overseas, and a gambling experience is something that is looked on favorably as an option for people coming out of China.”
