Sky City Entertainment Group said today its December half year net profit fell 23 per cent to $45.0 million.
The casino operator announced a 25 per cent cut in its interim dividend to 9 cents per share.
The profit fall was despite an 8.5 per cent rise in operating revenue to $419.2m.
Managing director Evan Davies said the interim result was at the lower end of the guidance range advised to the market in October 2006 and this would be reflected in the full year result.
Mr Davies attributed the fall to weaker trading conditions in Auckland where its flagship casino is, and losses from high rollers and commission play.
The pretax profit was down 18.9 per cent to $64.1m and the tax provision was down 7.8 per cent to $19m.
Earnings per share is 10.3 cents, down from 14 cents per share in the previous period.
The high rollers/commission losses were flagged in a profit warning in October.
Mr Davies said adjusting for non-recurring items and high rollers' volatility, the underlying normalised profit was $48.2m.
"The normalised profit gave a clearer indication of underlying business performance by removing the volatility of VIP/commission play and one-off capital-related transactions."
Gaming comprising 72 per cent of revenue.
Sky's Hamilton, Christchurch, Queenstown, Darwin and Adelaide properties all traded in line with, or ahead of, expectations.
Auckland revenues fell 4.7 per cent to $213.1m, driven by an 8 per cent fall in gaming revenues to $163m.
While both gaming machines and local table play reported lower revenues, the major impact was due to significantly reduced revenues from international commission play. After payment of commissions, international VIP play recorded a loss of $2.9m, a significant reversal of previous results.
Overall pre-tax earnings (ebit) were down 22 per cent to $65.4m.
Gaming performance was offset by strong non-gaming business results with hotel revenue up 18 per cent to $15.4m.
Mr Davies said the clear focus now was to lift operational gaming performance.
He said an upgrade of the gaming floor was critical.
Adelaide revenues rose 7.5 per cent to A$71m ($81m) boosted by a positive customer response to the recent refurbishment which helped to drive a 10 per cent increase in gaming revenues.
Sky City Darwin continued to benefit from economic and tourism growth. Gaming and non-gaming growth contributed to a 6.7 per cent revenue increase to A$49.4m, while ebit rose 10.4 per cent to A$14.9m.
Sky City Hamilton delivered strong double-digit revenue growth, up 19 per cent to $19.5m with ebit growth of 32 per cent to $7.4m.
Christchurch Casino and Sky City Queenstown both performed in line with expectations.
Sky City Cinemas' result was been adversely affected by a lack of high quality films, Mr Davies said.
Cinema revenues, after accounting for doubling of Sky's ownership interest to 100 per cent, were marginally down at $33m. Ebit fell from $2.4m to $1.8m over the comparative period.
Sky shares closed on $5.08 yesterday. They have risen from $4.45 a year ago.