Star Entertainment Group profit slips as high roller gamblers spend less

Star Entertainment Group, the company behind Brisbane’s Queen’s Wharf project, made less profit after high roller gamblers spent less at its casinos.

The Star Entertainment Group’s first-half profit dipped 2.4 per cent.

THE Star Entertainment Group’s first-half profit dipped 2.4 per cent to $123.8 million after more of its high stakes gamblers cashed out early.

Australia’s second-largest casino operator, which owns casinos in Sydney, Brisbane and on the Gold Coast, says normalised profit, which strips out win rate volatility and one-off items, slipped because a high win rate resulted in a lower number of turns from international VIPs.

But the company raised its interim dividend from 7.5 to 10.5 cents after statutory profit - which incorporates the substantial win rate and the sale of land around the Star Gold Coast - rose from $32.9 million a year ago to $148.5 million.

The company said the result was impacted by its VIP turnover, which declined 33 per cent in the first half of fiscal 2019 to $20.7bn.

The Star said the performance of its VIP business reflected moderating market growth, a high win rate - enjoyed by the casino - of 1.62 per cent and an unusually low turn of 9.7 times.

A higher win rate impacts turnover negatively because players will tap out earlier if losing, hence the “low turn” figure.

The Star’s rival, Crown Resorts, on Wednesday reported a fall in its VIP turnover, flagging that while it had a “reasonable” number of visitors from China, their spending was down.

Actual VIP revenue at The Star increased 2.5 per cent, which was assisted by the high win rate. The Star also pointed to a solid sales performance in its VIP business, which it said delivered 10 per cent growth in unique patron visitation, with front money of $2.1bn flat on the prior corresponding period.

The Star said in its results announcement that trends in its VIP business early in the second half of fiscal 2019 were similar to the first half.

Macquarie said The Star had presented a strong domestic result with revenues up six per cent but the result was a miss because the decline in VIP volumes was worse than expected.

Shares in the company were up 5.5 per cent at $4.64 at 12.05 AEDT.