Crown Resorts normalizes away bad news

TAGs: Australia, crown resorts

crown-casino-resultsAustralian casino operator Crown Resorts enjoyed good growth at its domestic casinos in its fiscal H1, which helped offset the dramatic downturn in the Macau casino market.

For the six months ending Dec. 31, Crown’s earnings fell 15.5% while net profit after tax fell 31.4% to A$262.4m (US $205m). That’s before $61.3m in significant items, including costs associated with the aborted Crown Sri Lanka project. Including those numbers, profit fell a whopping 47.2% to $201.8m.

However, Aussie casino operators prefer to report ‘normalized’ numbers, which smooth out the wild variance in the VIP gambling market and other occasional hiccups. Employing those normalized rose-tinted glasses, revenue rose 17.2% to $1.7b, earnings rose 14.8% to $450.2m while profits rose 2.3% to $322.4m. There, that’s better, isn’t it?

Maintaining that normalized facade, Crown’s domestic casinos saw revenue rise 16.1%. Main gaming floor revenue rose 3.5%, non-gaming revenue rose 2.4% while VIP gambling turnover rose a hefty 61.4% to $37.1b.

Crown Melbourne reported normalized earnings up 26.1% to $351.2m thanks to an 86.4% rise in VIP revenue. VIP turnover set new records in November and December as high-rollers looked for somewhere other than Macau to test their luck. Crown Perth’s earnings rose 7.7% to $127m as main floor revenue rose 3.7% and VIP rose 1.2%.

In a demonstration of how illusory ‘normalized’ numbers can be, Crown Aspinall’s normalized earnings rose 17.8% to $20.7m although actual earnings were negative $3.5m. Frankly, we wouldn’t be surprised to learn there’s someone out there who believes Seattle won the Normalized Super Bowl.

In Macau, Crown’s one-third stake in the Melco Crown Enterainment joint venture dragged even normalized profits down 21.5% to $110.4m.

Crown’s online betting operations produced negative earnings of $5.2m in H1. In August, Crown paid $10m to assume full control of Betfair Australia, then morphed the business into a joint venture – two-thirds owned by Crown – with Matthew Tripp’s BetEasy.

Crown says it hopes planning approval for the oft-delayed Crown Sydney project will be “resolved shortly.” In the meantime, Crown is teaming with the Schiavello Group on a plan to build a new five-star hotel adjacent to Crown Melbourne. In December, Crown paid $50m for a 50% share of the land on which the hotel will stand. The parties will share the development costs 50/50, but Crown has the right to acquire and manage the hotel upon completion.

At Crown Perth, the new Crown Towers is on schedule for completion by December 2016. The $645m project will feature 500 luxury hotel rooms, private gaming salons, a grand ballroom, restaurants and ritzy retail outlets.

Crown also announced it had extended the contract of CEO Rowen Craigie for a further three years. That is, unless those are normalized numbers, and he was actually fired six months ago.


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