Photo / Dean Purcell
The snow is still melting around New Zealand but SkyCity Entertainment chief executive Nigel Morrison is forecasting sunnier days ahead for the Kiwi casino company.
Morrison yesterday presented financial results for the year to June 30 with significant increases in Auckland gaming machine revenues and in non-gambling revenue.
Auckland gaming machine revenue was up 5 per cent in the first half and 10.5 per cent in the second half - providing returns not seen since 2008 and the global financial crisis.
Auckland non-gaming revenue - from the firm's increasing array of food and beverage sales and hotels - was up 8 per cent last year. Morrison predicts the Rugby World Cup will deliver an extra $8 million profit to hotels, which will flow through to the casino floor.
Morrison was predicting a mainly fine outlook for the New Zealand economy, saying that in the second half of the 2011 financial year SkyCity was "exhibiting a momentum for growth".
"Business confidence in New Zealand is improving, with positive employment statistics, retail turnover growth and a stable interest rate environment," he said yesterday.
Some in the retail sector are wary about consumer confidence in a volatile market. First New Zealand Capital analyst Rob Bode noted that the SkyCity chief executive tended to be bullish.
But other analysts said there were signs the gambling market had started to recover.
While Auckland gaming machine revenue has been a shining light, SkyCity has not been so lucky with table games in Auckland. Revenue for the year was down 5.6 per cent, mainly through a fall from second-tier upmarket gamblers - a group mainly made up of New Zealand punters.
Morrison admitted these customers had not been well served and would benefit from some of the new capital developments.
Results across the Tasman have been mixed.
In Adelaide operating profits were up 8.9 per cent to $34 million, due in part to cost-cutting and a 5.6 per cent increase in revenue from table games.
Morrison said Adelaide achieved pleasing growth despite the challenging retail environment in Australia.
Results for Darwin were "disappointing" with an 8 per cent fall in slot machine revenue contributing to an overall drop of 3.1 per cent to $112.5 million. Operating profits were down 10.7 per cent.
Morrison said the high value of the Australian dollar meant more Australians had travelled overseas and fewer had visited the Northern Territory, where the local economic recovery was expected to be slow.
SkyCity's Hamilton casino operating profits were up 4.2 per cent, buoyed by the local dairy sector, with gaming machines up 9.6 per cent.
Christchurch casino was closed from February 22 to May 27 while it was inside a cordon, but its proximity to the quake-hit city's closed-off red zone continued to hurt revenue.
SkyCity announced a $15 million write-off of the value of its 50 per cent stake in the casino from $89 million to $74 million.
Morrison said capital expenditure in Auckland had been a major boost for its flagship casino, with $60 million on upgraded gambling facilities and several additional bars and restaurants.
He said the improvements, including a new rooftop development opening at the end of month, were reinvesting the return from the sale of SkyCity's cinema interests 18 months ago.
SkyCity Entertainment's half-year dividend of 8c brings the annual dividend to 16c a share, representing 70 per cent of net profit. Sixty per cent was imputed at 28 per cent with the payment date on October 7.