SkyCity Entertainment Group has reported that its net profit after tax for the six months to December 31 was 10.6% lower year-on-year.
The New Zealand-based casino operator posted normalized revenue of NZ$510 million ($377 million) in H1, an increase of 9.2% from the same period the year before. The company’s EBITDA increased by 3.1% to NZ$154.4 million ($114 million) while normalized NPAT rose 0.3% to NZ$66.6 million ($49 million).
But that small growth couldn’t prevent SkyCity from posting a drop in net profit after tax, which the company said resulted from a lower-than-average win rate of just 1.04%, below the theoretical rate of 1.35 per cent, and difficult conditions in Australia where the company’s operations in Adelaide and Darwin have been affected by rebuilding challenges.
Despite the short dip in profit, SkyCity CEO Nigel Morrison said that the company has gotten off to a good start in January, which pulled the group-wide VIP win to above theoretical number of 1.50%. “The interim results for FY15 are pleasing, with strong momentum in the Group’s core businesses,” Morrison said.
SkyCity’s flagship business in Auckland did most of the work, generating NZ $302.5 million ($224 million) in revenue, a 17% improvement. EBITDA was also up 17% to NZ$124.3 million ($92 million).
Meanwhile, the company’s ambitious SkyCity convention center is in danger of becoming an “eyesore” unless the government infuses more cash into the project. New Zealand Prime Minister John Key indicated that his administration is looking into different ways to help SkyCity after the casino operator admitted to needing an extra $70 to $130 million to be able to complete the project.
“But the escalation in prices to build the convention center, which is bigger than was proposed and is flasher than what was proposed, means there’s a hole,” Key said as quoted by Stuff.co.nz.
Rather than settling for a smaller and less attractive development, Keys said the government could look into raising the funds to complete the $402 million project, which the casino operator agreed to develop in exchange for concessions on gambling licenses.