Crown results beat expectations as VIPs return

Crown Resorts posted higher-than-expected normalized H1 profit as VIP gamblers returned to its Australian properties.

Normalized net profit after tax gained 0.6 percent to $192.4 million ($151 million), beating the $178 million expected by analysts. Normalized EBITDA was up 11.2 percent at $447.7 million.

At the Australian operations, revenue gained 4.8 percent to $1.55 billion. Main floor revenue edged up 0.7 percent to $859.6 million, while VIP program play turnover surged almost 16 percent to $22.6 billion.

“Crown’s Australian operations’ first half result reflected mixed trading conditions,” Executive Chairman John Alexander said in a press release. “VIP program play turnover in Australia of $22.6 billion (up 15.9 percent) was a pleasing outcome, particularly at Crown Melbourne (up 37.5 percent), given the difficult trading conditions in the pcp.”

In 2016, China arrested Crown employees in China on gambling related charges, hitting VIP business in Australia.

Crown has been scaling down its international business to pay down debt and focus on its operations at home. The company last year ended its venture with Macau’s Melco Resorts and also pulled out of plans to build a resort in Las Vegas.

The company said its net operating cash flow for the period was $368.5 million compared to net operating cash flow of $230.0 million the prior year. After net proceeds received from the sale of investments of $95.8 million, net capital expenditure of $166.9 million and dividend payments of $206.7 million, the group’s net debt position at end December was $249.9 million.

Signs the VIP market is rebounding was welcome news to investors, who sent the shares up more than 4 percent in Sydney trading.

The company is currently constructing a six-star resort in Sydney targeting Asia’s VIPs. Crown says construction of the property is progressing on schedule with the tower foundations
complete and the main structure starting to rise.

The project remains on schedule for completion in the first half of calendar year 2021 and the total gross project cost is expected to be approximately $2.2 billion, with a net project cost of approximately $1.4 billion.

Crown’s digital division was another highlight in its results, posting gains in revenue of 24.6 percent to $191.5 million. The company is selling CrownBet, which currently forms part of the digital sector and expects to complete the transaction before the end of February.

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