Australia’s Crown Resorts posted a 35% increase in full-year profit to A$646 million but warned that weak consumer sentiment will continue to plague the company’s resort casinos in Melbourne and Perth.
Chief Executive Rowen Craigie blamed the year’s tepid top-line performance—normalized revenue was down 0.7% at Melbourne, down 3% at Perth—on the domestic economy and cited the 2% growth in main-floor gaming revenue at flagship Crown Melbourne as indicative of the problem.
“That’s not where we want to be,” he said, adding that costs, for staffing especially, were outpacing that rate. He said job losses in the Victorian manufacturing industry and a tapering of the mining investment boom in Western Australia were taking a toll. “That gets back to issues of consumer confidence, job security, mortgage repayments, credit card repayments etc.”
It was strength in high-end play combined with the company’s 34% stake in Macau’s Melco Crown Entertainment that carried the company, with Melco the “main contributor,” Mr Craigie said. Crown’s stake earned a $291.2 million equity-accounted share of profit, up 91% on last year. VIP turnover at Melbourne and Perth was up 36.5% in the second half, following a drop of 25.8% in the first half.
“The higher-end [customer] is travelling a bit better than the lower end,” Mr Craigie said.
Crown has approval to build a $1.5 billion luxury hotel and casino in Sydney and is bidding for a resort casino license in the Queensland capital of Brisbane in partnership with China state-owned property developer Greenland. The company also has purchased land on the Las Vegas Strip for development of a $2 billion megaresort. Plans also call for development of a resort hotel with a casino in the Sri Lanka capital of Colombo.
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