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SkyCity revenue down 2.8 percent in YTD as strong kiwi crimps returns

Friday 18th October 2013

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SkyCity Entertainment Group, New Zealand's only listed casino operator, said revenue before one-time items dropped 2.8 percent so far this financial year as a higher New Zealand dollar crimps returns from its Australian businesses.

Revenue before one-time items fell to $268.7 million in the period from July 1 to Oct. 13, from $276.5 million in the year-earlier period, the company said in notes for delivery at its annual meeting in Auckland today. SkyCity shares fell 1.2 percent to a three-day low of $4.04.

In SkyCity's New Zealand business, revenue so far this financial year rose 2.9 percent to $165.2 million. In Auckland, the company's biggest operation, revenue rose 3.8 percent to $145.9 million as it benefited from modest growth in core local gaming revenues and strong growth in international business while non-gaming revenues remained flat.

Softness in its Hamilton business continued, with revenue down 14 percent to $14.7 million so far this financial year, while its expanded Queenstown operation boosted revenue 78 percent to $4.2 million.

In Australia, total revenue of A$90.3 million so far this year is unchanged from the year earlier period. Revenue fell 3.7 percent to A$46.6 million in Adelaide on "soft" visitor numbers as a number of the main railway lines at the train station adjacent to the property remain closed for electrification until December. In Darwin, revenue rose 4.3 percent to A$43.7 million as the business benefits from investment in the Lagoon Resort and improved gaming facilities.

SkyCity said a rise in the New Zealand dollar against the Australian dollar had trimmed $12.5 million from earnings in the period. The New Zealand dollar bought 87.20 Australian cents in the current period, up from 78.09 cents in the year earlier period, the company said. It recently traded at 87.94 Australian cents.

SkyCity expects to grow revenue in its underlying business for the full year, chief executive Nigel Morrison said in the notes, without providing details. The company will provide further guidance with its first-half earnings release on Feb. 12, he said.

The most significant factors impacting full-year earnings are the high New Zealand dollar against the Australian dollar; macro-economic conditions in New Zealand which are showing some inconsistent positive signs; continued challenging economic conditions in Australia and particularly South Australia; an improvement in Adelaide Casino trading on the back of reforms which are likely to have minimal impact on earnings in the current financial year; and growth in the international business, Morrison said.

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