Relieved Crown reels high-rollers back in to notch slight profit rise

HIGH-ROLLERS are returning to Melbourne providing a much-needed boost to James Packer’s Crown Resorts as it regroups after its failed international expansion.

James Packer’s Crown Resorts saw a surge in VIP gamblers in Melbourne offset lower returns from its Perth and London operations. Picture: AAP

HIGH-rollers are returning to Melbourne, providing a ­much-needed boost to James Packer’s Crown Resorts as the casino company regroups after its failed international ­expansion.

Crown yesterday reported a 33.6 per cent plunge in net profit to $238.5 million for the six months to December.

However, after adjusting the result for one-off items and smoothing out its short-term win rate, the “normalised profit” squeaked in at $192.35 million — up about 0.5 per cent on the same period a year earlier.

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Investors were expecting the rocky result as Crown continues to sell assets and consolidate operations in Australia.

The restructure was forced by the sudden loss of Chinese VIP patrons following the ­arrest late in 2016 of Crown staff in China and the closure of its marketing office by the Chinese government.

Its shares rallied 4.4 per cent yesterday, boosting the group’s market value by $378 million. Crown chairman John Alexander said a surge in high-stakes gamblers had been “pleasing” given the “difficult trading conditions”.

High-roller revenue across the company’s Melbourne and Perth casinos was up 15.9 per cent to $305 million on turnover of $22.6 billion.

The highlight was a 37.5 per cent jump in Melbourne VIP gambling, which helped offset lower returns from its main floor and high-roller operations at Perth and its London casino, Aspinalls.

Chief financial officer Ken Barton said the recovery in the number of Melbourne high-stakes gamblers had come from junket marketing, following Crown’s lockout from ­direct marketing in China.

“We’re seeing a greater proportion of our activity coming from (providers of) junkets now, who obviously have their own ability to source customers and bring them down here,” Mr Barton said.

Crown CFO Ken Barton. Picture: David Geraghty

Junket operators help promote casinos to high-stakes gamblers in offshore markets.

“That brings with it some margin loss because obviously the commission structure for individual players is different than for junkets, but you still see it in the volume recoveries,” Mr Barton said.

The Melbourne operations reported normalised earnings before interest and tax of $235 million, up 12.9 per cent. Crown Perth turned in EBIT of $84.5 million, which was down 15.9 per cent, and Aspinalls earnings clocked in at $9 million, down 49 per cent.

Crown’s digital gambling division also underperformed, reporting a $3 million loss, due to accounting treatments for the pending sale. Revenue in that operation was up 24 per cent to $191.5 million.

During the half, Crown agreed to sell its 62 per cent shareholding in CrownBet for $150 million to a CrownBet management team. Crown’s digital division will still own Betfair and a 70 per cent share of Texas-based DGN Games.

Crown also sold or agreed to sell its shares in Caesars Entertainment Corporation for $US53 million ($68 million), its site on Las Vegas Boulevard for $US300 million and its remaining share in Ellerston Estate, at the Hunter Valley, to Mr Packer’s sister Gretel, for $62.5 million.

The Crown development project in inner Sydney was on schedule with 75 per cent of subcontracts locked in at fixed prices, Mr Barton said.

The $2.2 billion Sydney hotel and VIP casino project also includes up to 90 luxury homes.

In Melbourne, its joint-venture apartment development with the Schiavello Group, adjacent to its flagship Crown Towers in Queensbridge Street, is still pending financing.

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