9 Feb 2018

SkyCity makes strong first half profit

8:35 pm on 9 February 2018

The casino company SkyCity Entertainment has posted a strong first half profit, as its New Zealand business grew and its high-roller business recovered.

SkyCity signage

Photo: RNZ / Claire Eastham-Farrelly

The net profit for the six months ended December rose 11.6 percent to $93.5 million, while normalised net profit, which smooths out volatile items, rose 7.9 percent to $90.3m.

It said the result was in line with expectations, with revenue up 4 percent to $554.7m. It's expecting its margins to remain steady as it hopes for a boost from foreign gamblers visiting during the Chinese New Year, which starts next week.

SkyCity chief executive Graeme Stephens said the company was confident of growth from existing and new projects, despite disruption from building work at its Auckland and Adelaide sites, and a slightly less favourable New Zealand economic environment.

He said the Australian casinos were stable, with lower interest costs on major projects and a stronger Australian dollar.

Last year, the company wrote down the value of its Australian operations, particularly in Darwin.

The international convention centre and hotel complex, being built by Fletcher Construction, was expected to be completed by mid-2019, which is six months behind schedule, with six major conferences booked for 2020, said Mr Stephens.

"We remain comfortable with our contractual arrangements, which provide for liquidated damages that should mitigate our losses through delay, but legal challenges from Fletcher Construction are possible," he said, adding that the project was expected to be in-line with the original budget.

The convention centre project is one of two that have caused heavy losses for Fletcher Building, which is expected to reveal further losses on Monday in its construction division above an earlier forecast loss of $160m.

Fletcher has also warned that it may breach the conditions of its borrowing agreements, as a result of those overruns.

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