Echo Entertainment Chief Executive John Redmond has resigned after a little more than a year on the job in the wake of second-half results showing that profits at the embattled Australian casino operator had fallen more than 30 percent.
High rollers pummeled the company during the period. Combined with a number of one-time charges, the effect drove net income down to A$46.1 million.
Chairman John O’Neill said Redmond and his wife, Carla, would return to the United States for personal reasons following a three-month transition period in which CFO Matt Bekier will take over the reins of the company and its flagship Star resort in Sydney and three casinos in Queensland, one of which recently was sold.
It was a tough year for Redmond and Echo. The American stepped in last October, succeeding another American, Larry Mullin, who resigned amidst a bid by rival James Packer to take control of the company at the same time he was pursuing a competing resort in Sydney, where Echo had held an exclusive license. Mullin quit not long after Packer engineered the ouster of O’Neill’s predecessor, John Story, and Redmond came in just as Packer appeared to have secured the tacit support of New South Wales Premier Barry O’Farrell for his $1.3 billion Crown Sydney across Darling Harbour from Star. Packer was awarded the license last June after Redmond’s counter offer to invest in a major expansion at Star was rebuffed by a panel O’Farrell had appointed to decide the issue of a second license.
In Queensland, Echo similarly is having to defend its historical dominance of the market against potential rivals following a decision by the government there to open up the state to at least three more casinos. Echo is pitching the state on a new destination-scale resort to replace its aging Treasury Casino in Brisbane, where Packer’s Crown Resorts is lobbying heavily for one of the licenses. Overseas developers also have expressed interest in the state, and it’s possible Echo’s Jupiters Gold Coast will lose its monopoly in that market as well.
Investors have reacted as expected. Echo’s ASX-listed shares have lost 35 percent of their value over the last year.
On the plus side, the company has managed to get $70 million for its Jupiter Townsville casino on Queensland’s northern coast in a sale to hospitality company Colonial Leisure Group, and Redmond described the start of the new financial year as “encouraging,” with revenue up across all properties in January, although he declined to give figures.
Bekier, who was CFO of Tabcorp, moved to Echo following its creation in 2011 in a spinoff of the betting giant’s casino assets.
“Matt knows the company and the Australian market exceptionally well and has been working closely with John in re-establishing a path towards profitable growth,” O’Neill said. “The board is confident that Matt is the right person to lead the group forward.”
