SkyCity annual profit soars on year-earlier items

Wednesday 19th August 2009

SkyCity Entertainment Group, New Zealand’s biggest casino company, posted a 131% gain in full-year profit, reflecting writedowns in the year-earlier period and earnings growth in Australia.

Net income jumped to $115.3 million in the 12 months ended June 30, up from $49.9 million a year earlier, when the results included a $58.4 million writedown of Sky City’s cinema businesses.

Excluding one-time items, annual earnings climbed 13% to $102 million. Profit was at the top end of the company’s $111 million to $116 million forecast range as Sky City repaid debt and increased equity funding, reducing finance costs.

The company’s shares rose 1.5% to $3.35 and have climbed 10% this year.

Sales gained 6% to $847 million on improved second-half trading and a "stand-out" record result from the Adelaide casino, which pushed Australian casino earnings before interest, tax and depreciation up 20% to $85.2 million.

EBITDA from the New Zealand casinos was little changed at $232.6 million. Interest costs fell 11.2% to $67.4 million and net tangible assets per share jumped from 11.3 cents to 58.4 cents, reflecting equity-raising during the year and debt retirement of $245 million. Total debt fell to $743 million.

The company said it had diversified earnings risk with Australian casino earnings now representing more than 40% of the Auckland casino, compared with 34% in 2008. Failure to grow gaming machine revenue in Auckland and the difficult trading conditions for the group's hotels were noted as disappointments for the year.

High roller "international" revenues took a hit, falling 48.5% to $17.5 million for the year.

The company will pay a fully imputed final dividend of 6.5 cents a share on September 11, making 15.5 cents for the year.

The company intends to continue paying fully imputed dividends at a payout rate of 60-70% of NPAT, and is withdrawing its Dividend Reinvestment Plan to prevent further dilution.

Priorities for the year ahead would be to grow the Adelaide business further, potentially expand conference facilities at Auckland, and improve returns from the refurbished Darwin casino, which suffered a margin squeeze over the last year.

The company said it was not so far noticing any change in gamblers' playing habits in New Zealand following the recent mandatory installation of Player Information Displays on gaming machines, but needed more time to assess their impact.

Businesswire.co.nz

Comments from our readers

No comments yet