Chips are down for Sky City

11:05 am on 21 October 2016

The chips are down for Auckland-based casino operator Sky City Entertainment as a drop-off in gambling and the high New Zealand dollar reduced first quarter revenue.

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Photo: 123rf

The company said total revenue was down 1.3 percent to $260.7 million in the three months ended September compared with a year ago. Normalised revenue, which takes account of one-off items, was down 6 percent on a year ago.

Sky City described the first quarter performance as "disappointing" and its shares plunged 54 cents or 13 percent in early trading to a 12-month low of $3.73.

Fewer visits from VIP high rollers drove a 20 percent fall in its normalised international business revenue to $34.3m.

Revenue from its two Australian casinos fell more than 8 percent to $75.8m, with difficult trading conditions knocking revenue down more than 7 percent at Sky City Darwin.

The company's cash-cow Auckland casino, which accounts for about half of Sky City's total revenue, fell 1 percent, with other revenue offsetting the downturn in gaming activity.

The company said the high roller business was likely to continue to be affected over the short-to-medium term by uncertainty in China, which has cracked down on foreign companies enticing Chinese gamblers to their establishments.

Last week, more than a dozen staff of Australia's Crown Resorts staff in China were arrested for allegedly breaking gambling regulations.

It said Auckland's business was expected to return to growth for the balance of the year, but the challenging trading conditions in Darwin were expected to continue at least in the near-term.

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