Sky City's result hit by Darwin smoking ban

Sky City's result hit by Darwin smoking ban

Feb. 16 (BusinessDesk) - Casino operator Sky City Entertainment Group said first-half net profit fell 5.5% to $67.1 million, dragged down by a smoking ban affecting its Darwin casino, falling earnings at its key Auckland casino and the October increase in goods and services tax.

The result was also dragged lower by earnings from the cinemas business, sold in February last year, being included in the previous first-half results. On a normalised basis, profit was up 2% while revenue rose 2.6% to $447.7 million.

Its key Auckland casino saw revenue fall slightly while operating earnings, accounting for nearly two-thirds of the total, fell 3.6% to $96.9 million.

Operating earnings from its next biggest asset, the Darwin casino, fell 13.4% in Australian dollar terms, reflecting the impact of the smoking ban introduced in January last year, but its Adelaide casino achieved a 5.9% lift in operating earnings.

Its Hamilton casino lifted earnings 3.1% while the contribution from its Queenstown and Christchurch operations was flat.

Chief executive Nigel Morrison said the result was solid “in the context of continuing challenging economic conditions in New Zealand and a softening retail environment in Australia.”

The Darwin comparison was always going to be difficult and the GST increase in New Zealand from Oct. 1 added nearly $3 million in costs.

He said there are positive signs of momentum into the second half, revenue in the first six weeks of which was up more than 9% on the same period last year.

The company is well advanced on a number of projects which will be completed in time for the expected influx of 85,000 plus visitors for the Rugby World Cup, Morrison said.

Consistent with previous guidance, “we would be disappointed if we did not achieve normalised NPAT (net profit after tax) of $127.4 million for the 2011 financial year,” the company said.

Sky City shares fell 0.9% to $3.30, having traded between $2.79 and $3.45 during the last 12 months.

(BusinessDesk)

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