CROWN ARRESTS IMPACT STAR RESULT AS VIP BUSINESS FALTERS
Written on the 16 February 2017 by Business News Australia
THE Star Entertainment Group is feeling the pinch of a 17.7 per cent drop in normalised profit (NPAT) following troubled times for its VIP business.
The high-roller market in China was thrown into disarray in October 2016 when 18 Crown employees across a number of Chinese cities were detained for gambling related crimes, a factor which the Star says has had significant bearing on its own half-year result.
Coupled with the financial pressure from higher-than-normal win rates across its International VIP Rebate business, this uncertainty in the market has resulted in a lacklustre NPAT figure of $107.1 million for the company.
Turnover for the International VIP Rebate business alone dropped 11.9 per cent to $20.8 billion, falling sharply during the November-December period.
The Star also delivered a 3.7 per cent diminished gross revenue of $1.173 billion, citing further disruptions from major capital works at its Sydney and Gold Coast properties, lower hold rates in its domestic business and an overall softer macro-economic environment.
Despite these difficulties, The Star chairman John O'Neill AO says the company has made decent ground towards long term goals.
"[The first half of FY17] has been another period of good progress for the group in executing its strategy to be Australia's leading integrated resort company," says O'Neill.
"Major capital works were completed, resulting in significant improvements to gaming and non-gaming offerings at our Sydney and Gold Coast properties."
The company remains focused on delivering its capital developments, with major projects scheduled for completion on each of its locations in Brisbane, Sydney and the Gold Coast before the end of the financial year.
Among the developments in store for 2H16 are upgrades to Sydney's Astral Residences, demolition prep works for Brisbane's Queen's Wharf site and a full rebrand of Jupiter's Casino to The Star Gold Coast.
The Star has announced an interim fully franked dividend of 7.5c. Its shares are currently trading at $5.04 after increasing a slight 0.3 per cent today.
Author: Business News Australia