'Pleasing' performance at SkyCity

Trading update at AGM shows earnings up 21% so far this year.

See also: SkyCity mulls buying private jet

Casino operator SkyCity [NZX: SKC], which holds its annual meeting this morning, is basking in the glow of good news as it informs shareholders it is “on track to deliver a pleasing first half result.”

Much of the satisfaction comes from an improvement at its Adelaide property.

Chairman Chris Moller said in speech notes to the meeting the Australian casino was the focus of such concern that “the chief executive [Nigel Morrison] has recently been spending a significant amount of time in Adelaide in an effort to turn the business around.”

In the four months to October 31, revenue at Adelaide grew 24% to $A70.3 million compared to the previous corresponding period, while earnings before interest, tax, depreciation and amortisation grew 77% to $A14.7m.

Although custom from locals was still weak, SkyCity said Adelaide had been boosted by international business, which had benefited from regulatory changes, and the success of two new restaurants.

International business turnover at Adelaide was $A1.3 billion for the first four months of this year, compared to $A1.5b for the whole of last year.

SkyCity is in the process of expanding the Adelaide casino at a cost of $A300m. Designs are to be finalised over the next six months, while the timing of the construction will depend on co-ordination with state government plans for development of the wider Riverbank site, the company said.

Mr Morrison said group normalised revenue for the first four months was up 11% to $373m, producing ebitda up 21% to $121.8m.

“It is pleasing to see the returns from the key investments we’ve made, and we are seeing continued momentum with strong growth across the group,” he said. 

SkyCity shares last traded at $4.22, valuing its equity at $2.5b.

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