12 Nov 2018

SkyCity's revenue rises with moderate profit growth expected

1:13 pm on 12 November 2018

The casino operator SkyCity has had a strong start to the financial year and expects to see moderate growth in its full year underlying profit.

SkyCity signage

SkyCity expects moderate profit growth over the next year. Photo: RNZ / Claire Eastham-Farrelly

In an update to investors, SkyCity said the turnover in its high rollers business rose 36 percent to $4.5 billion in the first few months of the year to 7 November, over the same time last year, with an improved win rate.

The group's normalised revenue, which excluded the ups and down in the win rate, rose seven percent, with six percent growth in the New Zealand business.

It said the flagship Auckland casino's operations all delivered positive growth, particularly the electronic gaming machines.

However, Hamilton casino's revenue was weaker, as an improved performance in gaming machines was not enough to offset a decline at the tables.

SkyCity's Adelaide casino's turnover was stable, despite ongoing disruption caused by construction activity.

The company said the A$330 million Adelaide expansion project was on time and on budget.

The Darwin casino, which had just been sold, also had a stable result. However, the company noted revenue would have been up eight percent if Darwin's result had been excluded from the group.

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The SkyCity Convention Centre in downtown Auckland isn't expected to be completed until 2020. Photo: Supplied

SkyCity sold the Darwin casino to the United States hospitality company Delaware North for about $200m last week, but would continue to operate that business until the transaction was finalised. The timing was subject to the buyer gaining regulatory approvals.

The casino operator said construction of the international convention centre and hotel project in Auckland by Fletcher Building continued to be a challenge.

The project was behind schedule and would not be completed by the end of next year.

However, it did not provide an update on when the project was likely to be finished, with a number of major conventions booked for 2020.

In the meantime, SkyCity said it was comfortable with the contract it had in place, and expected any additional costs caused by the delays to be covered by liquidated damages.

It said legal action against the contractor, Fletcher Building, was still being evaluated.

The SkyCity project had contributed a large portion of the total $660m losses suffered by Fletcher's failed business and interiors business.

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