James Packer is not happy with the performance of Crown Resorts’ Australian casinos, saying it needed to improve its net profit for shareholders.
Crown Resorts’ revenue from its main floor gaming at its Melbourne and Perth casinos grew 10% year-on-year during the period covering July 1 to October 18.
Growth in turnover from high-rolling VIP gamblers has met expectations, Crown said at its annual general meeting on Wednesday.
Non-gaming revenue increased by 1% but the new CrownBet online wagering brand has continued to incur start-up losses, despite revenue growth.
“We have to get better at achieving an acceptable return on the capital expenditure we spend in Australia,” Packer told investors. “The capex we’ve spent in Australia hasn’t delivered the returns we budgeted on.”
Packer also added that Crown’s Australian resorts could no longer hide behind the historical success of its Macau operations.
“Up until 2014 in Australia that was hidden by Macau’s success,” said Packer. “But net profit after tax is the number that matters and that will be down again this year because Macau hadn’t stopped declining.”
Crown’s net profit in 2015 fell 17.9% to $525.5m as an increase in corporate costs, a poor performance from Macau and moderate growth from its Perth casino weighed on revenues.
Crown’s new chairman Rob Rankin remains positive on the company’s future but said it is not without its challenges.
“In particular, we will need to execute very well on our development pipeline to deliver acceptable and attractive returns. In other words, we will be more focused on maximizing Crown’s net profit after tax for the benefit of all shareholders,” Rankin added.
Crown is set to build its $1.5b, 90-storey hotel and apartment complex in Melbourne’s Southbank to lure VIPs while Studio City in Macau officially opens next week with 250 gaming tables approved by Macau authorities.
Crown shares rose 2.33% to $11.84 in early trading on the ASX on Wednesday.