SkyCity says Australian sales gain lifts prospects for 2009

Monday 16th March 2009

SkyCity Entertainment Group, New Zealand's biggest casino operator, said a jump in Australian revenue so far in the second half buoys the prospects for 2009 earnings.

Total group sales in January and February were "marginally ahead" of the same period last year, chief executive Nigel Morrison said in a newsletter to shareholders. Revenue from the Adelaide complex rose 20% after the company spruced up its facilities to emphasise the casino over the nightclub.

"While we continue to believe that our future performance will be influenced by how the New Zealand and Australian economies unfold, we are encouraged by our recent results to February," Morrison said.

Sky City has trimmed back its dividend payout ratio to between 60% and 70% of net profit to give it more retained funds for debt repayment. Profit growth before one-time items stalled in the first half, reflecting the impact of recession in New Zealand, spurring the company's efforts to revamp its gaming floors.

In the three months through February, revenue from gaming machines in Auckland rose 4%. Total revenue from Auckland was unchanged from a year earlier in January and February.

Shares of Sky City rose 1.1% to $2.80 and have slid about 8% so far this year, about matching the NZX 50 Index's decline.

SkyCity has "a sound balance sheet and debt position," giving the company a buffer in the economic downturn, Morrison said. It has no significant debt coming due until 2012 and has an unused long-term debt facility in place for $500 million with a syndicate of banks.

By Jonathan Underhill

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