SkyCity's profits up 8%, meets guidance
SkyCity Entertainment has revealed a “normalised” full-year net profit of $141.4 million, up 8% or $10.5 million on last year’s result.
The result, for the year to June 30, was broadly in line with market expectations, after the casino group had forewarned net profit would be in the low $140 million.
Revenue rose 8.2% or $65.4 million to $867.2 million, buoyed by a $50.7 million or 95% rise in Auckland international business revenues.
A final dividend of 8c (the same as last year) will be paid on October 5.
SkyCity shares have fallen 3c to at $3.55 since the result was revealed this morning.
Earnings were also strong from the group’s core Auckland business – earning revenue of $527.4 million – up $66.2 million or 14.4% - with $10.7 million attributed to the Rugby World Cup.
Chief executive Nigel Morrison said 65% of that growth, or some $20 million had come from new international gaming suites and salons, new VIP table games precinct ‘Eight’ and the outstanding success of new Federal Street award-winning restaurants ‘The Grill’ by Sean Connelly and ‘Depot’ by Al Brown.
“Our revenues in Auckland grew by 14% in the second half, from $226 million to $259 million with 65% of the growth coming from our international business and with our food and beverage revenues growing by 25% in the second half,” Mr Morrison said in a statement.
“Our international business in Auckland has trebled since 2010. The international gaming clientele who visit us form China, Hong Kong, Singapore, Thailand and Malaysia bring valuable export income to Auckland and New Zealand.
“They visit attractions around Auckland, Rotoroa and Queenstown, demonstrating the further potential of New Zealand as an international tourist destination to high-spending Chinese and South East Asian tourists.
The first six weeks of the financial year have "started well" with normalised revenue up more than 5% on the previous period. "The comparative period will be more challenging due to the rugby world cup 2011 impact in the full-year 2012,' said Mr Morrison.
Plans for the opening of a new Japanese Robata-styled restaurant in Federal St with New Zealand chef Nic Watt of Roca and Zuma fame will soon be announced.
“We hope that the Auckland Council will in the near term approve our investment of $10 million into Federal Street so we can get on and transform it into one of the great pedestrian/alfresco streetscapes in Auckland.”
It was disappointing SkyCity had not yet been able to conclude negotiations with the government about the development of an international convention centre, said Mr Morrison.
Plans have stalled while the Auditor General reviews the expression of interest process undertaken by the Ministry of Economic Development.
“Our expectation is that the Auditor General’s report will be completed in one to two months, following which we would hope to re-engage with the government and conclude these negotiations.”
SkyCity has spent $30 million buying land adjacent to its Hobson St site in central Auckland for the centre.
“We remain committed to the development of the New Zealand International Convention Centre in Auckland... providing the ultimate terms of the transaction remain acceptable to SkyCity,” said Mr Morrison.
The government is offering to extend SkyCity's gaming licence, letting it lift its number of pokie machines, in return for the company footing the bill for the centre's construction and operation. Brokerage Goldman Sachs estimated SkyCity would need 350 to 500 extra machines to profit from the deal, generating as much as $46 million of revenue in the first full year of operation.
The Darwin casino and hotel boosted sales by 3.8 percent to A$117.9 million and earnings before interest, tax, depreciation and amortization by 1.2 percent to A$34.7 million. Darwin returned to growth in the second half of 2012 and the outlook for full-year 2013 is "positive,” it said.
In Adelaide, sales rose 2.6 percent to A$160.8 million and ebitda edged up 1.9 percent to A$36.7 million.
SkyCity’s Hamilton casino lifted sales by 8.8 percent to $52 million.
The Christchurch casino continues to face “challenging” trading conditions following the city's 2010 and 2011 earthquakes. Full-year sales fell 9.7 percent to $5.6 million and ebitda also fell 9.7 percent to $5.6 million, it said.
The recent release of the Christchurch Central Recovery Plan should provide "further clarity around the rebuild of the city, with the planned convention centre and other civic buildings within the proximity of the casino," it said.
- additional reporting BusinessDesk