Sky City delivers underlying profit rise

Casino operator Sky City Entertainment Group reported a 12 per cent rise in underlying net profit to $129.1 million, despite a 1 per cent fall in revenue to $837.9 million.

Net profit, before a tax adjustment for the Government's tax change to building depreciation, for the year to the end of June, rose 22.9 per cent to $141.7m, while bottom line net profit was down 11.5 per cent to $102m.

The company is to pay a final dividend of 9.25c per share, taking the full year dividend to 17.25cps.

The previous year the final dividend was 6.5cps and full year dividend was 15.5cps.

Sky City said that while revenues were down 1 percent, expenses fell 1.2 per cent to $539.3m.

Effective capital management, together with tight control over capital spending saw the repayment of $254m of debt during the year, Sky City said.

Chief executive Nigel Morrison said strong competition for discretionary spending by consumers had resulted in flat returns in this country and modest earnings growth in Australia.

The economic environment in New Zealand and Australia remained uncertain and would continue to have an impact on gaming markets and earnings, Morrison said.

"However, we expect to continue to deliver improved returns as the economy recovers."

Machine revenue at Sky City's Auckland operations was down 2.4 per cent, but with the pub and club market in the city down 7.6 per cent, the company continued to increase its share of the Auckland market.

Table revenues in this country fell 6.6 per cent from a year earlier, almost exclusively within the premium play segment, Morrison said.

"The challenging environment of the past 18 months has significantly impacted small and medium business owners and operators who make up our premium play segment. We would expect our premium play market to recover strongly as the New Zealand economy recovers."

The decline in premium play revenue in Auckland was almost fully offset by a rise in international business, which increased from $6.4m in 2009 to $14.5m.

Sky City's two hotels in Auckland had gained significant market share during the past two years with hotel revenue up, against the market trend.

In Australia, the Adelaide business had its second consecutive record result with earnings before interest, tax, depreciation, and amortisation (ebitda) up 7.1 percent to $A31.5m ($NZ40m).

During the financial year Sky City sold its cinema operations at a gain over carrying value of $10.3m.

Darwin casino ebitda fell 3.8 percent to $A38.4m, while for the Auckland casino operations ebitda was down 5.2 percent to $193.8m.

Sky City said it was planning a series of strategic investments at its existing properties, including working with the Auckland City Council on transforming Federal St, next to the Auckland casino, into a pedestrian-friendly restaurant, bar and entertainment precinct.

It had also submitted a proposal to the Government for a National Convention Centre in Auckland.

Sky City shares were unchanged on $2.99 around 11am, having earlier been up 4c shortly after the results were published.

- NZPA