Crown boss John Alexander hails US tax reforms, as profit slips

Crown boss John Alexander praises Reagan and Trump tax cuts, and would love Australia to follow suit.

Melbourne’s Crown Casino has reported a 37.5 per cent increase in VIP activity. Pic: AFP

Crown Resorts executive chairman John Alexander has paid tribute to US presidents Ronald Reagan and current Oval Office resident Donald Trump for their corporate tax reforms, and hopes for changes in Australia as the James Packer-backed casino company focuses on Australia for its future growth.

Unveiling Crown Resorts’ latest financial results for the December half, Mr Alexander told The Australian he would ideally love a lower tax rate in its biggest market, Australia.

He said US presidents had led the debate since the 1980s, when President Reagan kickstarted his revolution to crimp the size of government while reducing federal taxes.

“We are obviously paying 30 per cent (tax) and we would love to pay 21 per cent, ask the (federal) government as it is not in our hands,’’ Mr Alexander said when pressed about the likelihood of the Australian government lowering corporate tax rates in the wake of Mr Trump’s move to slash US rates to 21 per cent from 35 per cent.

“And I think if you look going back to the 1980s how Reagan changed ... Ronald Reagan changed the whole global tax profile.

“I mean, whatever you think about Trump, what he has done is obviously in a very short period of time, a lot of American multinationals who have had their money parked offshore have returned that money and jobs to the domestic US, so wait and see.’’

Mr Alexander confirmed that after pulling out of international gaming hot spots Macau and Las Vegas, Crown Resorts would now be squarely focused on harnessing future growth from its Australian gambling assets spread in Sydney, Melbourne and Perth.

“That is the board’s current intention, focus on the domestic company. Macau hasn’t made us gun-shy, we got six times back our money back on Macau.’’

Mr Alexander was speaking after Crown unveiled a 33 per cent hit to its half-year profit, but said Chinese high rollers had boosted activity at its Melbourne casino.

The company (CWN) said net profit after tax, after significant items, was 33.6 per cent lower than the period corresponding period at $238.6 million.

The result in the prior corresponding period had included profit from Crown’s interest in Macau-focused Melco Crown, plus a net gain on the sale of its shares in Melco Crown.

Crown’s normalised net profit after tax was 0.6 per cent higher at $192.4m. The normalised result is generally referred to by analysts as the best measure of performance of the business, given it removes the inherent volatility in VIP gaming revenue.

Mr Alexander said the casino company’s Australian operations’ first half result reflected mixed trading conditions.

He said total normalised revenue across Crown’s Australian resorts increased by 4.8 per cent on the prior comparable period. Main floor gaming revenue increased by 0.7 per cent, with modest revenue growth in Melbourne offset by softness in Perth.

Mr Alexander added that VIP program play turnover in Australia had increased 15.9 per cent to $22.6 billion, which he said was a pleasing outcome. He singled out Crown Melbourne, which saw a 37.5 per cent increase in VIP activity, which he said was a good result given the difficult trading conditions in the prior corresponding period.

Crown’s rival The Star Entertainment Group also revealed in its half-year results that Chinese VIPs had returned to Australian casinos after a period of volatility following the arrest of Crown’s staff in China in October 2016.

Crown Resorts is firmly focused on its Australian operations these days after selling out of its international interests, including Macau and Las Vegas.

James Packer with Crown Resorts executive chairman John Alexander. Pic: AFP

The half-year result showed that normalised EBITDA for its flagship resort Crown Melbourne was up 7.2 per cent to $325.3m, while the Perth operation recorded a 5.1 per cent dip in normalised EBITDA to $128.7m. The result also showed that normalised VIP program play revenue at Perth was down 41 per cent to $42.7m, with turnover of $3.2 billion.

Hotel occupancy at Crown Towers Perth hotel was 75.3 per cent, with an average room rate of $306, while the occupancy rate at Crown Towers Melbourne was 98 per cent with an average room rate of $382.

The company’s wagering and online social gaming division delivered an EBITDA of $8.8m, which compares to a loss of $3m in the prior corresponding period. That division includes online bookmaker CrownBet, which Crown Resorts reconfirmed it was selling to CrownBet boss Matt Tripp, who has until the end of the month to finalise funding for the deal.

Crown’s results also revealed today that it was selling one of its aircraft, a 16-year-old Bombardier Global Express, to a company controlled by Crown director Harold Mitchell for $US4.35m.

The board declared an interim dividend of 30c-per-share.