A particularly high win rate in VIP masked over ongoing challenges in the high-end segment as Crown Resorts reported a 5.9% increase in revenue to AU$1.12 billion and 24.8% improvement in net profit attributable to parent to AU$218.2 million for the six months through 31 December 2019.
VIP turnover suffered a 34.2% year-on-year decline for the period to AU$13.1 billion, with recently appointed CEO Ken Barton noting the business was “impacted by a continuation of softer market conditions, exacerbated by recent negative publicity. However, during the period we benefited from an above theoretical win rate on VIP program play turnover, with actual VIP program play revenue up 9.2% on the prior year.”
Crown’s VIP win rate in 1H20 was 2.30%, well above the theoretical win rate of 1.35% and the low 1.02% win rate during the prior year period.
Barton also hinted that Crown’s VIP turnover numbers might struggle to improve in the short-term, stating, “Crown has been closely monitoring the novel coronavirus (Covid-19) outbreak and continues to follow guidelines from relevant health authorities. Crown has recently experienced softer trading conditions as a result of travel restrictions and general community uncertainty in response to Covid-19, particularly over the Lunar New Year period.”
Main gaming floor revenue at Crown’s Australian resorts stayed flat at AU$872.9 million with a small gain in slot machine revenue to AU$387.5 million offset by a slight fall in table games to AU$485.6 million.
Taking Crown’s high VIP win rate out of the equation, normalized results saw an 8.3% decline in group-wide revenue to AU$1.03 billion, 11.0% fall in net profit to AU$172.7 million and 9.0% fall in EBITDA to AU$381.3 million.
Following a recent overhaul of the Crown boardroom, which saw John Alexander step down as Executive Chairman and Helen Coonan appointed new chair, Barton said that Crown “continues to review and improve its governance structures” and will “shortly commence a competitive tender process to appoint a new statutory auditor of Crown.
“In addition, Crown is cooperating fully in relation to the various regulatory inquiries underway, including the New South Wales ILGA Inquiry. We operate in one of the most highly regulated industries and Crown is committed to improving our processes and systems in every respect. We look forward to working with regulators on any recommendations that may follow.”
