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SPARKLING new Sydney casino The Star has given Echo Entertainment Group a winning boost to its bottom line as the group’s ageing Queensland casinos continue to under perform.
Echo has reported an $83.5 million net profit for the 2012 full year, up 97.9 per cent on the previous year.
Pre-tax earnings rose 25.8 per cent to $334.6 million, aided by 17 per cent growth in revenue at The Star versus a 3.3 per cent fall in revenue across Echo’s three Queensland properties, including Jupiters on the Gold Coast and Treasury in Brisbane.
The result has fired up debate over Echo’s proposed capital expenditure plan in Queensland, which includes a major new casino complex for Brisbane and the long-awaited upgrade of its Broadbeach property.
Echo says it is still in discussions with the Queensland Government regarding its proposed local investment, although the company gives little away in the notes accompanying its latest profit results.
The casino operator blames its Queensland result on a “soft consumer environment”, while it says the Gold Coast hotel market “continues to be challenging”.
“The Queensland properties will not reach their potential until further significant investment is made,” says Echo’s CEO John Redmond (pictured).
“While recent trading has been challenging in Queensland, we remain committed, positive and engaged on the underlying potential of these assets and share the Newman Government’s vision for tourism and the opportunity that segment provides for the medium-term growth profile of our assets.
“We have a wonderful opportunity to be at the forefront of that tourism push and we continue to work collaboratively with the Government to help develop those plans as a holistic approach for south-east Queensland.“
The underlying pre-tax profit from Echo’s Queensland operations came in at $70.9 million, down 33.5 per cent from $106.6 million a year earlier.
After abnormal items, the Queensland result was 40 per cent down at $62.2 million.
In a sign that The Star and James Packer’s Crown Casino in Melbourne are pillaging the “whale punter” market, Echo’s Queensland VIP revenue fell 44.5 per cent to $24.8 million.
Even at the normalised rate, which balances out big wins or losses by the casino, the Queensland take from VIPs is down 12.8 per cent to $39.5 million.
Echo is paying a final dividend of 2c a share, bringing the full-year payout to 6c a share.
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