15% drop in Sky City's half-year

SkyCity has booked a 15% decline in profits for the half-year to December at $66.3 million, after enjoying an $11.5 million boost from the Rugby World Cup in the same period last year.

SkyCity has said it intends maintaining its dividend for the full year, unchanged at 20c per share, and gave guidance its expected normalised full-year-after-tax profit would be ''around $140 million''.

Reported revenue was $487.3 million, or 1.3% down on a year ago, including a decline in wins against international visitors.

While SkyCity has numerous expansion options under consideration at present, it made little mention of the controversial convention centre expansion in Auckland, plans to expand operations substantially in Queenstown or opportunities in the Philippines.

''Various expansion options are being considered [for Queenstown] and we will expect [they] will be announced during the second half, 2013,'' the company said.

Now that SkyCity can up its betting limit at Queenstown, having taken over its former joint venture partner's shareholding, SkyCity wants its own southern accommodation in place to entice VIP customers from Auckland to Queenstown.

Craigs Investment Partners broker Peter McIntyre described the result as ''average and underwhelming'', noting international visitors to New Zealand had won more than expected - a difference of $8.4 million.

''On the other side of the ledger the dividend guidance of 20c per share will keep SkyCity investors reasonably happy,'' Mr McIntyre said.

Shares in SkyCity were down 0.5% following the announcement, at $3.98.

He said full-year guidance was reduced to about $140 million, with contributions from Auckland and Darwin expected to be up in the second half, with Adelaide casino flat.

Mr McIntyre said SkyCity's net debt of $543 million was below Craigs' forecast of $595 million, while net operating cashflow of $111 million was below Craigs' forecast of $121 million.

Forsyth Barr broker Peter Young said the group revenue was in-line with expectations, reflecting ''flat'' results from casinos in Auckland and Adelaide, ''continued gains'' from Hamilton, and ''strong recovery'' in Darwin.

The reported profit, before abnormal items, was similarly in-line with expectations, assisted by low interest rates and tax, Mr Young said.

Following SkyCity's changed profit guidance to ''around $140 million'', Mr Young said he hoped this was ''conservative'', as opposed to ''the ''overly optimistic'' guidance a year ago.

- simon.hartley@odt.co.nz

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