SkyCity full-year profit rises 31% on improved international business win rate, Auckland trading

Wednesday 12th August 2015

SkyCity Entertainment Group, the casino and hotel company, said full year profit rose 31 percent as an improved win rate for its international business and strong growth in Auckland made up for a disappointing performance in Adelaide.

Profit after tax rose to $128.7 million, or 22 cents a share, in the year ended June 30, from $98.5 million, or 17 cents, a year earlier, the Auckland based company said in a statement. Sales rose about 12 percent to $1 billion. SkyCity also provided 'normalised' figures, to reflect the performance of its underlying business, which showed revenue rose 8.7 percent and profit rose 8.8 percent.

The company said its improved results reflected 'continued strong growth in Auckland," strong growth group-wide in its international business - the term it uses for 'high roller' gamblers - "solid growth" in earning in Hamilton and earnings growth at Darwin. By contrast, Adelaide had a "disappointing performance".

In Auckland, SkyCity reported record results, with normalised revenue up 13 percent in the year and normalised earnings before interest, tax, depreciation and amortisation gaining about 14 percent to $247.8 million.

"This growth continues the positive recent momentum across all business segments, with the property now having delivered six consecutive quarters of Ebitda growth," the company said.

"Going forward, the Auckland property will also benefit from the activation of the New Zealand International Convention Centre gaming concessions, which are expected to start by the end of 2015 following signing of a binding building works contract" for the centre, SkyCity said, referring to the deal with the government to build a convention centre in exchange for increased gaming concessions.

SkyCity Hamilton had a 4.5 percent gain in normalised revenue to $50.6 million, while normalised Ebitda rose about 16 percent to $19.9 million. Its combined Queenstown operations had normalised revenue growth of 34.6 percent to $18.3 million and normalised Ebitda of $2.9 million.

SkyCity Darwin recorded Ebitda growth of 7.2 percent on what it said was flat local revenue "in a challenging market".

The company's international business lifted normalised revenue by 43 percent to $125.6 million. Normalised Ebitda rose 35 percent to $26.4 million. The actual win rate of 1.36 percent in the year was broadly in line with the theoretical win rate of 1.35 percent.

Adelaide Casino's performance was hampered by refurbishment works completed in January. It said modest 4.8 percent growth in normalised revenue to A$174.1 million was offset by shrinking margins, resulting in a 19 percent drop in normalised Ebitda to A$27.3 million.

The company said trading in July showed "a continuation of the momentum" seen in the second half of the 2015 year, with "strong performances" in Auckland, Hamilton and international business.

Ebitda margins improved overall for the group compared to July last year "at all properties except in Adelaide and for international business," it said.

SkyCity said it currently has enough debt funding to meet expected funding requirements until at least the start of 2018 but is continuing to investigate a potential New Zealand retail bond issue following the repayment of capital notes in May.

The company will pay a final dividend of 10 cents a share, imputed to 25 percent for New Zealand investors.

The shares last traded at $4.29 and have gained 11 percent this year.

BusinessDesk.co.nz

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