SkyCity betting that NZ will recover

Nigel Morrison. Photo / Glenn Jeffrey

SkyCity Entertainment is betting that New Zealand will emerge from the economic downturn but says recession will likely bite deeper in Australia.

Chief executive Nigel Morrison said gambling revenue at SkyCity casinos in Auckland, Adelaide and Darwin had been resilient, with table games less susceptible than machines.

In New Zealand the hospitality business through SkyCity Hotel and conference business had been "challenging" with more late bookings.

Overall New Zealand was affected earlier but would emerge from the recession more quickly. "But the recession will bite deeper in Australia where unemployment is really taking off," he said.

"We are glad that we are in Adelaide and Darwin rather than Sydney which has been losing 30,000 to 40,000 jobs a month," he said.

SkyCity is spending several million dollars developing and refurbishing bars, beginning next month.

Auckland City Council was supportive of plans to develop the Federal St precinct adjacent to the casino, Morrison said.

SkyCity Entertainment revealed last month it was rebranding its Auckland casino complex as a full entertainment destination as it tried to bring in customers. It will develop a higher profile with charities with a substantial advertising campaign mid-year.

The ratings agency Standard and Poor's included SkyCity in a report on Australia and New Zealand companies, giving it a it BBB-/Stable rating.

Standard and Poor's said SkyCity's December half-year result reflected solid performance from its core casino business, despite weaker earnings from its international VIP business.

The tough outlook for the New Zealand economy, however, was a challenge for the group.

The New Zealand operations contribute about 70 per cent of the group earnings before interest, depreciation and amortisation. Meanwhile, Moody's Investors Service is maintaining its negative outlook for Asia Pacific's gaming sector over the next 12 to 18 months. Moody's downgraded Galaxy Casino in January by two notches from B1 to B3, with a negative outlook, on concerns over pressures to its cash flow and financial position after its decision to postpone the opening of its Galaxy Macau Resort.

SkyCity shares closed at $2.99 on Friday.

In the past 12 months it has traded as high as $4 and as low as $2.52.

LUCK OF THE DRAW

* SkyCity owns casinos in Auckland, Hamilton, Queenstown, Darwin and Adelaide.
* It also owns a cinema chain, hotels and convention centre.
* In the half-year to December 31 its reported profit before interest, tax and depreciation fell to $148.5 million from $158.7 million.