Crown Resorts profit falls 22% as Melco Crown goes from rocket to anchor

TAGs: Australia, crown resorts, Melco Crown Entertainment

crown-resorts-melco-crown-macauAustralian casino operator Crown Resorts took a beating in its fiscal H1 thanks to the continued challenges facing its Melco Crown Entertainment joint venture.

On Thursday, Crown handed in its H1 report card, which showed net profit falling 22% to AU $205m (US $147.5m) in the six months ending Dec. 31. The struggling Melco Crown was fingered as the culprit, as Crown’s share of the Macau casino operator’s H1 profits fell 89% to $9.4m.

Crown’s shares tumbled nearly 10% on the news – the biggest single-day decline since 2008 – but CEO Rowen Craigie chose to emphasize the “solid” performance at the company’s domestic resorts, which saw ‘normalized’ revenue – so-called because it helps smooth out high-roller variance – rise 4.2% to $1.7b.

The domestic gains came courtesy of a nearly 10% rise in main floor gaming revenue, which offset a 3.8% decline in VIP turnover. Craigie called the latter number a “reasonable outcome” given “the depressed nature” of the Asian VIP gaming market.

Crown’s VIP decline was blamed on Crown Melbourne, where high-roller revenue fell 11%, while Crown Perth’s VIP business rose 28.4%. Both casinos boasted improved main floor revenue, although Melbourne’s 12.9% gain eclipsed Perth’s 3.2% rise. The Crown Aspinalls casino in London’s Mayfair district reported normalized revenue falling 17.8% to $49.2m

Crown’s online operations, which include CrownBet, Betfair Australasia and Texas-based social gaming outfit DGN Games (which Crown acquired last July), reported a net loss of $9.8m in H1.

Craigie had little to provide in the way of updates on the company’s various in-development projects. Crown Sydney is still waiting on planning approval, plans are still being drawn up for the five-star hotel addition to Crown Melbourne and the Alon Las Vegas project is still trying to raise the necessary funding.

Craigie also had little to say regarding rumors that former chairman and majority shareholder James Packer is looking to take the company private, saying only that Crown had yet to receive any formal proposal.

As for the company’s $362m amended tax bill from the Australian Taxation Office, Crown reiterated that the company would “pursue all available avenues of objection.” So if you drive past a Crown casino and the lights are out, don’t worry, they’re just pretending that they’ve moved.


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