13 Feb 2020

SkyCity reports drop in underlying profit amid challenging times

12:39 pm on 13 February 2020

Large insurance payouts and proceeds from an asset sale have lifted the half year profit of gaming company SkyCity Entertainment.

Sky City logo

Photo: RNZ / Claire Eastham-Farrelly

The casino operator made a net profit of $328 million for the six months ended December, compared with $82.8m the year before.

However, leaving aside one-off items, the underlying normalised profit was down 16 percent to $75m.

"Our underlying performance is broadly in line with the guidance we provided at the beginning of the year," chief executive Graeme Stephens said.

The fire at the International Convention Centre and associated hotel in October has also complicated its numbers.

The company has included $226m in insurance recoveries for the fire, but has also booked costs of more than $47m. The sale of its carpark concession brought in another $220m.

Stephens said the convention centre's builder - Fletcher Construction - has completed a plan to repair the building, which was significantly damaged in the fire which raged for several days, shutting down parts of Auckland's central business district.

The accounts show the cost of repairs could range as high as $256m and noted the insurance payment could change materially from the amount being budgeted for.

"We have recently been advised there will be material delays to the completion of the construction, and hence the project is unlikely to be delivered in 2021," he said.

The convention centre was set to be a major venue for next year's APEC summit.

No major virus impact yet

Group revenue was up 75.4 percent to $721.7m, while normalised revenue was down 7.9 percent to $450.9m.

Stephens said New Zealand's operating performance had been positive, but international business had been weak, with fewer visits from key customers, especially for its high-roller business, which attracts a large number of Asian based gamblers.

He said so far there was no big impact from the coronavirus.

"It is too early and uncertain to estimate any future financial impacts - but based on past precedent, we expect any impact to be temporary."

The Auckland and Adelaide casinos had seen some softness in table games but normal business at pokies.

He said less than 5 percent of the group's normalised profit, excluding the high rollers business, was generated by Chinese customers.