SkyCity boosts earnings 14pc

SkyCity Entertainment Group, New Zealand's only listed casino company, boosted earnings 14 percent in the first four months of its 2016 financial year on improved results from its flagship Auckland businesses and its struggling Adelaide property.

Earnings before interest, tax, depreciation and amortisation rose to $107.2 million in the four months ended October 31, from $94.1 million in the year earlier period, the Auckland-based company said in a statement. Revenue advanced 10 percent to $363.6 million.

SkyCity, which has four casinos in New Zealand and two in Australia, lifted Auckland earnings 14 percent to $89.6 million as revenue rose 6.2 percent to $209.3 million. Its Adelaide business, which the company singled out as an underperformer last year, improved in the latest period, boosting earnings 77 percent to A$14.7 million as revenue jumped 24 percent to A$70.3 million. Revenue from its international business, the term it uses for 'high roller' gamblers, jumped 51 percent.

The company is on track to deliver a "pleasing" first-half result, chief executive Nigel Morrison said in the statement, without being more specific. SkyCity is due to report first-half earnings on Feb. 11, 2016.

Its shares rose 0.5 percent to $4.24. Before today, the stock had risen 8.8 percent this year.

Morrison has been spending a significant amount of time in Adelaide in an effort to turn the business around, chair Chris Moller said in notes for delivery at the company's annual meeting in Auckland today. Earnings at Adelaide, the company's second-largest property by revenue, dropped last financial year as growth in expenses outpaced an increase in revenue.

"Significant progress has been made on addressing the cost structure of the Adelaide operations," Morrison said today. While local gaming was soft in a challenging local economy, new restaurants and an increase in international business had helped bolster the margin to about 21 percent in the first four months of the current financial year, he said.

The company expects to begin ground works on its Adelaide expansion plan, including a hotel, villas and suites for its international business, and an expanded gaming area, in the first half of next calendar year, it said. The building costs are estimated at A$250-A$270 million, with associated additional costs of as much as A$47 million, it said.

Meanwhile, SkyCity's Darwin business increased earnings 7.8 percent to A$16.6 million in the four-month period, as revenue lifted 3.3 percent to A$52 million, the company said. The unit continued to experience "challenging" trading conditions, underpinned by soft hotel occupancy and food and beverage revenue, it said.

The company's Hamilton casino increased earnings 28 percent to $7.8 million on an 11 percent lift in revenue to $18.1 million. Its Queenstown casinos boosted earnings to $1.9 million from $200,000, as revenue jumped to $10.7 million from $4.6 million, aided by significant revenue growth from international business, the company said.