Australian casino operator Crown Resorts saw its half-year profit slump despite celebrating the return of its Asian VIP gamblers.
On Thursday, Crown announced that its revenue hit A$1.78b (US$1.4b) in the six months ending December 31, up 0.8% from the same period one year earlier. Earnings eked out a 0.3% gain to A$400m but net profit after tax (NPAT) slipped 12.4% to A$155.7m.
Using the ‘normalized’ results – a fiction that imagines a world in which VIP gambling win never deviates from a fixed percentage – the company’s earnings improved 11.2% to A$447.7m and NPAT nudged up 1.4% to A$189m. Also, in a normalized world, Crown boss James Packer can gorge on all the ice cream he wants and never gain weight. Just saying.
(To be fair, the statutory year-on-year comparisons are a mess, given that the previous year’s H1 results included Crown’s share of the Melco Resorts & Entertainment (formerly Melco Crown Entertainment) profits, from which Crown divested itself fully last spring.)
Crown’s exec chairman John Alexander said the results reflected “mixed trading conditions,” including the “pleasing” 16% rise in VIP gambling turnover across Crown’s domestic resorts. Crown has been slowly rebuilding its VIP business, which plummeted following the October 2016 arrests of Crown execs for violating China’s laws against promoting gambling on the mainland.
The overall domestic resorts’ VIP win rate was 1.31%, not far off the theoretical win rate of 1.35%. However, VIP win at Crown Melbourne was 1.21%, down 0.69 points from one year earlier, spoiling a 37.5% rise in the property’s VIP turnover. At Crown Perth, VIP turnover plunged 41% to just A$3.2b while VIP win shot up 0.33 points to 1.91%. So Crown just couldn’t win.
Main floor gaming revenue was also a mixed bag, with Melbourne up 2.3% to A$618.2m and Perth falling 3.3% to A$241.4m. Overall non-gaming revenue improved 6.6% to A$390m.
Outside Australia, the London-based Crown Aspinalls reported statutory revenue rising nearly 10% to A$44.7m while earnings quadrupled to A$9.5m thanks to a significant bump in the VIP win rate.
As for Crown Digital, the company’s online wagering and social gaming business, revenue was up one-quarter to A$191.5m while reduced costs helped the division post earnings of A$8.8m versus a A$3m loss one year earlier.
Despite the digital division finally posting positive results, Crown recently announced it was selling its 62% stake in the CrownBet online wagering business for A$150m, a deal the company expects to close by the end of this month. That will leave Crown Digital with just the Betfair Australasia betting exchange and the Texas-based DGN Games social gaming operation.
Crown offered an update on its A$2.2b Crown Sydney project, saying the tower foundations were in place and the main structure was starting to rise. Crown says it’s confident that the casino hotel will open on schedule in H1 2021.