SkyCity expects FY profit in '$140 millions’, close to 2012 result

BUSINESSDESK: SkyCity Entertainment Group, the casino and hotel operator, says full-year profit is expected to be "in the $140 millions", in line with the 2012 result, with Darwin seen as a standout in otherwise flat trading conditions.

The shares fell 2.5% to $3.85 on the NZX today and have gained 13% this year. Normalised net profit, which strips out one-time items and adjusts for its theoretical win rate, was $141.4 million in the year ended June 30.

Managing director Nigel Morrison told shareholders at the annual meeting today that it would be "somewhat challenging" to match last year's first-half result, which got a boost from the Rugby World Cup.

Still, based on current market conditions and trading patterns "we would be disappointed if we did not deliver full-year normalised group NPAT for the year ended June 30, 2013, in the $140 millions".

In the year to date, July 1 to October 17, sales at the company's main Auckland casino fell 4.9% to $146.1 million, with about $7 million of RWC revenue that was not repeated. Hamilton sales rose 14.2% to $17.6 million and the rest of the New Zealand business was up 20.5% to $4.5 million.

For the Australian casinos, Adelaide revenue rose 0.5% to $A49.6 million and Darwin by 12.4% to $A44.2 million.

That resulted in overall group revenue falling 2.1% to $283.2 million in the year to date.

"Our sense of Auckland and the New Zealand economy is that it is somewhat flat and that the outlook is uncertain," Mr Morrison says. Still, "we expect that our flagship Auckland property will continue to benefit from the capital improvements made and that they will continue to deliver growth".

Adelaide's outlook is also "somewhat flat" while Darwin growth "should underpin our Australian businesses in FY13".

The company invested $165 million on capex, mainly upgrading its facilities, last year, including $32 million spent in Auckland on restaurants and gaming, $32 million on Darwin's Lagoon Resort and gaming villas, and $32 million buying land in Auckland for the proposed conference centre.

Chairman Rod McGeoch, who steps down from the position after 8½ years, says lessons that can be taken from major gaming venues such as Macau and Singapore were that "bold, ambitious gaming venues have a crucial role to play in integrated tourism infrastructure".

He also says the company is a major employer and jobs at its venues are keenly sought. It has 111,000 job applicants on its database and 3000 to 3500 people apply just in Auckland each month. Total workers across all its sites are 6610.