SkyCity first-half profit to fall as high NZ dollar crimps returns from Australia

Tuesday 17th December 2013

SkyCity Entertainment Group, New Zealand's only listed casino company, said first-half profit will fall as a rise in the New Zealand dollar crimps returns from its Australian businesses.

Normalised after-tax profit will probably be $65 million to $68 million in the six months ending Dec. 31, the Auckland-based company said in a statement. That's lower than the $72 million profit in the year earlier period, excluding earnings from the Christchurch casino which was sold in December 2012.

The New Zealand dollar has accelerated away against its Australian counterpart, touching a fresh five-year high overnight, as a strengthening local economy contrasts with a slowdown in Australia. SkyCity, which has four casinos in New Zealand and two in Australia, said an 18 percent rise in the exchange rate would trim about $3 million from first half profit.

The New Zealand dollar bought 92 Australian cents in the current period, up from 78 cents in the year earlier period, the company said. It touched a five-year high of 92.57 cents overnight, and was recently trading at 92.27 cents.

Auckland, the company's biggest operation, is expected to post "modest" growth in earnings before interest, tax, depreciation and amortisation, SkyCity said, without providing specific figures.

The company's Adelaide casino is experiencing a challenging trading environment while its Darwin business is experiencing some cost pressure and will post a softer earnings margin in the first half.

Meanwhile, in its other New Zealand units, SkyCity said Hamilton would post "softer" earnings in the first half even as the second quarter improved from the first quarter. Both of the company's Queenstown casinos were refurbished in the half, it said.

In the company's international business, the first half is expected to improve from the year earlier period, SkyCity said.

Full details on first-half earnings are scheduled for release on Feb. 12.

BusinessDesk.co.nz

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