Echo Entertainment revenue rises, SkyCity falls in duelling fiscal year results

echo-entertainment-skycity-casino-revenueAustralian casino operator Echo Entertainment saw profit rise 27.3% in its most recent fiscal year thanks to revenue gains and trimmed expenses. Nearly all the gains were recorded in the second half of the fiscal year ending June 30 as the cost-cutting initiatives put in place by former CEO John Redmond began to take effect on Echo’s performance, particularly at its flagship The Star casino in Sydney. Chairman John O’Neill said Echo had demonstrated “solid momentum” in H2 and it was a good feeling to have closed out the year “ahead of market expectations.”

Normalized revenue grew 3.9% year-on-year to AUD $1.97b (US $1.83b). The final number was entirely due to the 12.8% revenue gain in H2, which offset a 4.8% decline in H1. Revenue at The Star rose 6.8% to $1.3b, which offset a decline at Echo’s Queensland properties, which fell 1.9% to $645.6m. VIP gambling turnover rose 6.5% and VIP revenue rose 6.9% to $472.2m. Overall earnings rose 12.2% to $439.1m while net profit after tax hit $106.3m.

Echo CEO Matt Bekier said the current fiscal year had started much as the past year had finished, “with good momentum in our major properties.” Bekier laid out three priorities for fiscal 2015: (a) continued greater focus on customers and managing expenses, (b) expansion of its Gold Coast property and (c) pissing off those Crown Resorts bastards by winning the Queen’s Wharf Brisbane casino license.

Casino operator SkyCity Entertainment Group saw revenue fall 1.9% in its most recent fiscal year. Normalized revenue from SkyCity’s three casinos in New Zealand and two in Australia during the 12 months ending June 30 came to NZD 927.3m ($786.4m) while profit fell 8.1% to NZD 123.2m ($104.5m).

SkyCity’s International (read: Asian VIP) Business saw turnover rise to a record NZD 6.5b, most of which (3.9b) was recorded in H2. Sadly, VIP win rate slipped to 0.97%, well off the 1.35% theoretical rate, but the hefty turnover boost ensured that VIP revenue rose 14.3% to NZD 88m. SkyCity raised its maximum table stake by NZD 50k to NZD 250k in December and the company is confident that the increased turnover will produce boffo revenue once the win rate returns to its theoretical norm. The current fiscal year has already seen turnover of NZD 1b through August 10 with a win of 1.3%.

SkyCity’s flagship Auckland property enjoyed a 3.3% bump in revenue to NZD 533.3m, with gaming revenue up 2.2% to NZD 399.8m. In Adelaide, revenue rose 3.6% to NZD 166.2m thanks to a 95% gain in International Business but the property suffered from ongoing construction efforts that closed as much as one-third of the main gaming floor at any one time. In Darwin, revenue was flat at NZD 133.1m as cost pressures in the local economy kept punters at home.

Looking forward, SkyCity CEO Nigel Morrison has expanded plans for the firm’s New Zealand International Convention Center (NZICC) in Auckland via the addition of a 12-storey 300-room five-star hotel. SkyCity expects the hotel will cost between NZD 170m-180m, which it expects to pay for via cash flow and current funding facilities. The total NZICC project now amounts to NZD 500m+ and SkyCity hopes to execute a construction contract by the end of the current fiscal year.