Sky City profits up 30pc

Photo / The Aucklander

SkyCity Entertainment Group has today announced a 29.6 per cent or $16.2 million rise in its first half after-tax profit to $71.02m and forecast its annual profit to be up to 15 per cent higher.

The normalised profit, taking into account international results and non-recurring items, was up 23 per cent of $12.8m to $68.4m.

The casino operator's result was on revenue of $446.99m, up 5.9 per cent from $422.10m on the first six months of last year. Earnings before interest, tax and depreciation (Ebitda) of $160.1 million was up 7.8 per cent.

A significant contributor to the interim result was net interest cost falling 29 per cent to $27m, following the $177m buybacks of US private placement debt.

"This was a pleasing result in what is still a challenging economic environment. While earnings of our New Zealand businesses were flat, our Australian businesses delivered 7 per cent earnings growth," chief executive Nigel Morrison said.

The company declared an interim dividend of 8cps, fully imputed, representing about 65 per cent of net profit after tax (Npat).

It forecast its annual Npat to be 10-15 per cent higher than last year's $115.3m, excluding a gain on cinemas divestment.

"As a group, we expect our second half earnings to be not dissimilar to the normalised earnings achieved in the second half last year. We have previously stated our objective of double digit Npat growth in (full year 2010), albeit in a challenging economic environment," said Morrison.

He said the New Zealand economic environment remained challenging with increasing unemployment, and a further contraction in pub and club gaming by 5 per cent compared to the same period last year. It was also the first full period of player information displays being on all gaming machines in New Zealand.

As a result, Auckland revenues were flat against the first half last year with gaming revenues down marginally.

"The revenue of our other New Zealand properties (Hamilton, Christchurch and Queenstown) were marginally up on last year, with earnings steady."

SkyCity was pleased with the continued growth by its Australian businesses, despite the fiscal stimulus of the 2009 financial year no longer present, softening retail activity, and a softening of pub and club gaming revenues across Australia in the latter part of the first half.

During the half year SkyCity sold the core of its cinemas business to Amalgamated Holdings Ltd.

The Overseas Investment Office yesterday advised it had given its consent to the transaction, and SkyCity was confident it would sell its remaining cinema assets by June 30, realising a gain of more than $10 million on their carrying value.

Morrison said international business turnover increased 18 per cent to $758m, with actual Ebitda of $5.3m.

- NZPA