SkyCity annual profit climbs 21% as sales beat broker target
by Paul McBeth
Aug. 17 (BusinessDesk) – SkyCity Entertainment Group, the country’s biggest casino operator, boosted annual profit 21% as its sales beat brokers' targets with Auckland gaming revenues reporting strong growth.
The Auckland-based company’s net profit was $123 million, or 20.9 cents per share, up from $101.9 million, or 16.8 cents a share, a year earlier, it said in a statement. Total sales before stripping out GST climbed 5.1% to $879.8 million, beating broker Forsyth Barr’s estimate of $798 million.
That was underpinned by Auckland’s gaming machine revenue climbing to pre-global financial crisis levels at $206.2 million.
“Auckland has had a strong second half, and this has translated into good growth and promising momentum,” chief executive Nigel Morrison said. “With a stronger Auckland economy and a more optimistic consumer outlook, our Auckland gaming machines are showing an encouraging return to levels not seen since 2008.”
SkyCity hopes to add to its Auckland offerings with a $350 million convention centre, and it will update shareholders at the annual meeting in November.
The gaming company has agreement in principle from the government for more gaming machines and an extension of its licence past its existing 2021 date in return to footing the entire bill of the centre.
Morrison said the deal is subject to “us being satisfied that we can generate an overall acceptable return for our shareholders.”
Still, the casino operator’s underlying earnings missed Forsyth Barr’s forecasts as construction at the Auckland hotel reduced the number of rooms on offer and it had to cater to the government’s hike in GST.
Earnings before interest, taxation, depreciation and amortisation rose 1.3% to $291 million, missing the $300.6 million target, while earnings before interest and tax was $222.4 million, falling short of the broker’s $229.5 million forecast.
SkyCity’s Auckland operation reported a 2% decline in EBIT to $158.7 million, while the rest of New Zealand slumped 68% to $6.7 million.
The Darwin casino’s EBIT dropped 10% to $32.7 million. Adelaide’s operations gained 15% to $33.8 million, and the company’s fast-growing international business almost doubled to $16.2 million.
SkyCity will pay a dividend of 8 cents a share, taking the annual payment to 16 cents. The shares rose 0.3% to $3.51 in trading yesterday, and have gained 6.8% this year.
Morrison didn’t give any earnings guidance for the 2012 financial year, though he said he was “excited and optimistic about our future in Auckland,” as New Zealand’s economic recovery gathers pace and the Rugby World Cup injects some 95,000 visitors to the country.
The company booked a $15 million charge on its half-stake in Christchurch Casino after the earthquakes in Canterbury, and is focusing on rebuilding the business.