MACAU SALE MASKS WEAKER RESULT FROM CROWN
Written on the 17 August 2016 by Nick Nichols
THE sale of its Macau joint venture has masked an otherwise weaker performance by James Packer's Crown Resorts (ASX:CWN) which reported a massive spike in earnings to $948.8 million profit in FY16.
The result, up 164 per cent from a year ago, was boosted by a net gain of $555.2 million after Crown offloaded its interest in Melco Crown Entertainment for $1.06 billion.
On a normalised basis, Crown posted 22.7 per cent fall in annual net profit after tax to $406.2 million. This is despite a marginal 0.8 per cent increase in normalised group revenue $3.23 billion.
Revenue rose in the main-floor gaming and non-gaming activities, but was hit by an 8 per cent drop in VIP player turnover to $65.1 billion.
"This was a reasonable outcome given the strong growth in the prior comparable period of 41.8 per cent and the depressed nature of VIP gaming activity across Asia," says Crown CEO Rowen Craigie.
Crown's share of the Macau business also hurt results, with weak conditions continuing in that troubled market. Crown's normalised earnings from Melco Crown Entertainment (MCE) fell 64 per cent to $58.1 million.
Proceeds from the MCE sale, combined with $180.7 million in dividends received from MCE during the year, were applied to cut Crown's debt.
Craigie says this has enabled Crown to maintain a strong balance sheet and credit profile to fund existing Australian developments.
Among key targets in the current year are the completion of the million upgrade of Crown Perth with the addition of the 500-room Crown Towers project, scheduled to open in December.
Crown Towers will become the largest hotel in Perth, where Crown had mixed results from its casino operations in FY16.
Plans are also progressing for the Queensbridge Tower project in Melbourne, a 388-room six-star project adjacent to the existing Crown Casino site.
Crown says this project is still subject to legal and funding agreements by its joint-venture partner the Schiavello Group
In Sydney, Crown is fighting a proposed court challenge to the concept plan for its Barangaroo development.
Crown will pay a final dividend of 39.5c per share, up from 19c a year earlier.
Author: Nick Nichols