13 Feb 2019

SkyCity first half net profit down 11%

11:29 am on 13 February 2019

The casino operator, SkyCity Entertainment, has reported a weaker first half profit as it earned less from its high roller business and flagged further delays for its convention centre.

SkyCity signage

SkyCity's net profit for the six months ended December fell 11 percent to $82.8 million. Photo: RNZ / Claire Eastham-Farrelly

The net profit for the six months ended December fell 11 percent to $82.8 million dollars compared with $93.5m last year.

When adjusted for one-off items and the effect of selling its Darwin casino last November, the profit was up 11 percent to $97m.

"We've had a really positive first half of this financial year, aided by some strong gains in International Business turnover and a good result from our flagship Auckland property, particularly on the gaming floor," chief executive Graeme Stephens said.

The high-roller business had an increased turnover of $7.7 billion, but SkyCity's win rate was nearly half that of the year before.

"While at a reported level SkyCity handed back much of these gains to customers who were luckier than normal, we look through this volatility and focus on the amount of play, which was very strong. Last year we were the lucky ones," Mr Stephens said.

The company's Auckland casino remained the backbone of earnings, providing more than half of group revenue, while there was slight growth in Hamilton and flat performances in Queenstown and Adelaide.

Mr Stephens said the growth outlook was modest for the rest of the year, with about a 5 percent lift expected in overall earnings.

It is also pushing ahead with its plans to build more hotels, and is waiting official approval to buy a site in Queenstown.

Sky also pushed out the completion date for the $700m international convention centre and hotel complex in Auckland.

The complex is being built by Fletcher Building and has been subject to cost overruns, and construction delays.

It is now not due to open in the second half of 2020, which has forced a review of bookings.

Sky said the delays have triggered penalty clauses in the contract which require Fletchers to pay damages.

The facade of the centre is being changed with aluminium cladding, which has been linked to fire risks overseas, being replaced at an added cost of $25m.

Separately, Fletcher Building issued a statement confirming a further delay in the convention centre, but confirming that it has not lost any more money on the project than it has already disclosed.

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