China’s Gaming Crackdown Hurts Crown Earnings
James Packer’s Crown Resorts has posted their results for the past financial year showing strong net profits, but a fall in underlying earnings due to the continued slump in gaming in the Chinese sector.
Following a crackdown on corruption and money laundering by the Chinese government, gaming has fallen in Macau and many operators, including Crown Resorts, have felt the impact.
In May, Crown Resorts sold some of its stake in its Melco Crown Entertainment, leaving it with 27.4 percent of the company. This generated $602 million for Crown and contributed to its increase in net profits for the year of 146.4 percent to $948.8 million compared to the same time the previous year.
However, Crown’s underlying earnings, which exclude one-offs, dropped 22.7 percent to $406.2 million. This was largely attributed to poor market conditions in Macau. In June, Macau announced its plan to divide its “high-performing” local assets from its under-performing International assets, particularly its Macau business.
“The 2016 full year result reflects a solid performance from our Australian operations and continued subdued trading in Macau,” stated Rowen Craigie, chief executive of Crown Resorts.
“Overall gross gaming revenue across the Macau market in the full year to 30 June 2016 declined by more than 20 percent.”
Revenue from the company’s Australian assets increased over the full year period with revenue from gaming floors in their Australian resorts, increasing 5.8 percent to $1.68 billion and non-gaming revenue rising 1.5 percent to $674.6 million.
Crown has received government approval to build a $1.5 billion luxury hotel and casino complex in Barangaroo in Sydney which will be aimed at the Asian high-roller market. The company is currently fighting a legal challenge of the approval.
March 23, 2017