Sri Lanka ouster played a part
Australian casino company Crown Resorts Ltd., led by billionaire businessman James Packer, reported net profit of AUD201.8 million (US$157.5 million) for the first half of the fiscal year, reports GGRAsia. Though the numbers were down 47.2 percent from the previous year, JP Morgan Securities analyst Matthew Ryan hailed the company’s strong showing in the Victorian capital of Melbourne.
“The highlight of the result was a stellar VIP performance with Melbourne revenue rising 86 percent year-on-year,” said Ryan. “Crown Melbourne VIP turnover of AUD30.3 billion during the half showed the company had a significant turnaround in the December quarter and showed Crown is not currently losing share to competitors in the region.”
The overall decline was attributed to write-downs on international projects and the crackdown on casinos in Macau, where Melco Crown Entertainment, co-owned by Packer and Lawrence Ho, owns and operates a number of properties. The crackdown, which has caused high rollers to flee the world’s leading gaming jurisdiction, “adversely impacted” Melco Crown’s performance, Crown said in a filing late last month. As a result, Crown’s share of reported net profit fell by 42.2 percent to AUD85.3 million.
Crown noted “significant items,” totaling AUD61.3 million, including the cancellation of a proposed project in Sri Lanka and the write-down of an investment in casino operator Cannery Casino Resorts LLC in the United States.
Last month, the Sri Lankan government under newly elected President Maithripala Sirisena rescinded Crown’s license in the country. The company had planned to develop a five-star resort on the South Asian island. In an explicit message to Packer, Prime Minister Ranil Wickremesinghe issued a statement saying, “Who asked you to come? Please don’t come?not in this lifetime.”
Crown’s 24.5 percent stake in Cannery has now been written down to zero, resulting in a $55.9 million impairment charge, reported the Australian.
Without the significant items and variances in win rates, net profit was up 2.3 percent to AUD322.4 million, Crown reported.
Crown CEO Rowen Craigie told analysts the company remains “very bullish about the prospects of China over the medium to long term: the expansion of the middle class, the general freeing-up of the ability of the Chinese to travel.”
Crown’s competitor in the Australian market, Echo Entertainment Group Ltd., has also seen record-breaking high roller play in the second half of 2014. Echo said turnover from VIP gamblers nearly doubled to an all-time high of AUD23 billion, reported GGRAsia.
But Crown’s newest property, City of Dreams Manila, will need six months to generate interest among foreign high rollers. “Since the soft opening (on December 14), it’s been primarily mass and premium mass,” Belle Corp. CFO Manuel Gana told GMA News. The $1.3 billion City of Dreams is owned by Melco Crown and local partner Premium Leisure Corp., a subsidiary of the Sy-led Belle Corp. The resort marked its grand opening February 2.
According to the Guardian, the crackdown on corruption in China that began last summer has cost Packer and other casino operators “pain” by removing a significant source of profits. Macau’s high rollers have accounted for as much as 70 percent of the city’s revenue, and many casino operators are moving toward mass-market gaming and entertainment to find new revenues.
Meanwhile in Sydney, Crown is building a AU$2 billion (US$1.56 billion) casino a short walk from Echo’s newly refurbished waterfront complex. The rivals are also vying for a casino license in Brisbane, which attracts an Asian clientele, reported Reuters.
