Disappointing SkyCity result in line with expectations

Casion operator SkyCity Entertainment has delivered a ''flat and disappointing'' result, as expected, with revenues and after-tax profit down 5.4% and 7.9% respectively.

Overall revenue dropped from $444.5 million to $423.5 million and after-tax profit fell from $66.3 million to $61.1 million.

Aside from losing about $2.4 million because of the high New Zealand dollar, overall revenue from international business was down 8% because of the timing of visits ''from a small number of large players'', the company said.

With its $402 million commitment to an Auckland conference centre, in partnership with the Government, and $A350 million ($NZ379 million) Adelaide site development under way, capital expenditure over the next two to three years will be closely scrutinised by investors, Craigs Investment Partners broker Peter McIntyre said.

Flying under the radar, but crucial to Adelaide's redevelopment, the South Australian government on Tuesday confirmed it would be developing a 1400-space car park near the Adelaide casino, with 1000 parks for exclusive SkyCity lease.

Mr McIntyre said the announcement gave SkyCity more certainty on its Adelaide redevelopment, parking being such a critical part of the equation.

On the half-year result, he said, ''Overall, it was was a flat and disappointing result, but it had been well flagged by the company in December.''

SkyCity shares were unchanged at $3.60, following the announcement.

Forsyth Barr broker Suzanne Kinnaird the result was ''broadly in line'' with expectations. Darwin was ''a bit disappointing'' and the soft Adelaide result not as bad as expected.

''Most properties were slightly softer than our forecasts, with total earnings before interest, tax, depreciation and amortisation of $150 million, versus forecast of $155 million,'' she saidShe noted small ''one-off'' gains, which, in aggregate, boosted reported numbers by $5 million and lowered the quality of the result.

January trading had started ''very strongly'' and New Zealand revenues were up 14.5%, driven by Auckland, and Australian revenues up 7.5%, Ms Kinnaird said.

Mr McIntyre said SkyCity had not given a lot of financial guidance yesterday, as many components of its outlook ''would not yet be visible'' to management, but he expected guidance updates at the full-year report.

''There should be increased earnings in the future, from 2017, but in the meantime it will be challenging for SkyCity to line up all its ducks in a row,'' Mr McIntyre said.

SkyCity repeated last year's 10c per share dividend, in line with its guidance to deliver a minimum 20c for the full year.

SkyCity said Queenstown, which had an almost 58% revenue gain to $7.1 million, benefited from additional international business in January. Revenue in January was up from $700,000 a year ago to $1.2 million.

- simon.hartley@odt.co.nz

SkyCity Entertainment casino revenues
Auckland: Down 2.2% to $258 million.
Hamilton: Down 10.1% to $24.9 million.
Queenstown: Up 57.8% to $7.1 million.
Adelaide: Up 1.1% to $A83.4 million.
Darwin: Up 1.1% to $A72.9 million.
- Christchurch casino sold in December for $80 million.



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