Sky City – the house always wins

A renewed focus on its core gambling business should see a rise in revenue for Sky City when it announces its interim result tomorrow, even though a lower dividend is on the cards.

Analysts are forecasting a rise in ebitda for the first half of the year of between 3% and 10% to about $160 million, with the performance of the Australian casinos expected to be the main driver behind the lift.

The result from the Auckland casino is also expected to be continuing the long, slow turnaround seen under the company’s new management strategies, with its core gaming performance improving to be flat in the first quarter of the year.

The strongest recent sign that Sky City is focussing on its core casino business can be seen in the sale of its cinema operation to Australasian cinema operator Amalgamated Holdings.

The $61.1 million prceeds from that sale will not be part of the interim result, with the transaction due to be completed later this week.

The full impact of the smoking ban in Darwin that came into effect at the start of the year will also not be felt in this result, although some sort of comment on the potential impact for the full year is expected.

Lower interest costs resulting from its equity raising last year should also see reported profit up by as much as 20%.

Despite the rises, a smaller dividend is expected as the company moves to a lower level of dividend payout.

Sky City’s guidance will also be closely watched tomorrow, to see if it maintains its forecast of double-digit bottom line growth for the full year.

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