Monday, March 08, 2010

Crown returns to profit in first half - 26th February 2010

Casinos operator Crown Ltd is cautiously optimistic about the second half of the financial year, after moving back into first half profit with "satisfactory" growth at Australian casinos.

Crown on Friday reported a net profit from continuing operations of $115.3 million for the six months to December 31, 2009 compared to a $409.7 million loss in the prior comparable period.

The previous corresponding period's result included a $547.5 million writedown on stakes in casinos in Canada, the United States and the United Kingdom, which were affected by the economic downturn in those countries.

After stripping out the impact of non-recurring items and the variance in the theoretical win rate against high-rolling gamblers, Crown's normalised net profit for first half of 2009/10 was $145.6 million, up three per cent on the normalised figure of $141.4 million in the prior corresponding half.

Crown chief executive Rowen Craigie said the overall results for Crown's casinos in Melbourne and Perth - which have been the focus since last year's writedowns on the overseas assets - were "satisfactory".

The first half had been strong but had tailed away later in the half due to a softening in consumer sentiment and a greater-than-expected impact of refurbishment and expansion programs at the Crown casino in Melbourne and the Burswood casino in Perth.

Mr Craigie declined to provide specific outlook for the second half, but said consumer sentiment had picked up in January and February, the replacement of the raised floor in the main casino at Burswood would be completed by April, and Crown was set to open its third hotel, the Metropol, at the Crown complex in Melbourne in March.

However, disruption due to refurbishment of the Teak Room at Crown casino in Melbourne would continue until August.

"And what the economy is going to look like over the next four months is obviously going to be a factor as well," Mr Craigie said.

"We've started the second half with the main gaming floor growing at close to twice the rate where we finished the first half and non-gaming is up as well.

"There are some things to look forward to, but obviously like others we are cautious about where the economy is going."

Mr Craigie said main-floor gaming revenue at Burswood and Crown grew by about three per cent in January and February 2010 compared to the prior corresponding period, and non-gaming revenue lifted about seven per cent.

Mr Craigie also said Crown was not intending to sell its gaming interests in Macau.

Crown holds a 35 per cent stake in Melco Crown Entertainment (MCE). Crown's share of MCE's result for the first half was a loss of $48.1 million.

Crown saw long-term potential for growth in the Macau market given its exposure to China, and MCE had announced that overall performance in January had been pleasing.

Mr Craigie said the US gaming market was still in difficulty and Crown had not considered any activity there in the last six months.

"The US market is still very depressed, Las Vegas continues to suffer declines in revenue and the other states which have allowed gaming are experiencing similar sorts of difficulty," he said.

Mr Craigie said that in the first half, renovations at Crown Melbourne and Burswood had affected main floor table revenue.

But the casinos achieved record turnover in high-roller gambling, which rose 22.9 per cent to $23.4 billion.

Non-gaming revenue had recovered and grew 4.5 per cent in the half.

In August last year, Crown said its principal efforts in the 12 months following would be to focus on enhancing Crown's Australian operations and to work with its joint-venture partners to optimise the value of our Macau and other overseas investments.

"We have made progress on those fronts during the past six months, and this will continue to be our focus," Mr Craigie said.

Crown declared an interim dividend of 18 cents per share, in line with the prior corresponding period.

Crown shares were 17 cents higher at $8.00 at on Friday.