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Peter Alexander Crown Casino Melbourne Address

Updated August 21, 2019 14:20:05

Australia's biggest casino operator Crown Resorts has posted a 28 per cent decline in full year profit as foreign gamblers, including high rollers from China, put less money on the table.

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Key points:

• Crown's VIP gambling revenue fell by 26pc as high rollers abandoned gaming rooms in Melbourne, Perth and London
• Crown chief John Alexander said 'subdued business conditions' were to blame
• Mr Alexander complained that allegations relating to criminal activity and international money laundering 'overshadowed' Crown's contribution to the economy

Crown's net profit dived to $401.8 million over the year, with revenue from foreign VIP gamblers collapsing by 26.1 per cent to $38 billion.

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Executive chairman John Alexander cited 'subdued market conditions', but said Crown's contribution to the Australian economy had been overshadowed by allegations the gaming empire had links to organised crime, money laundering and arrangements for the fast tracking of foreign visas.

Mr Alexander said Crown operates in one of Australia's most highly regulated industries with oversight from state gaming regulators and the anti-money laundering agency AUSTRAC (Australian Transaction Reports and Analysis Centre).

'It comes as no surprise that various regulators and other agencies have launched inquiries given recent media reports and the sensationalist nature of the allegations raised,' he said in a statement to the stock exchange.

'Crown has zero tolerance for criminal elements and we view these inquiries as an opportunity to continue our cooperation with regulators and other agencies.'

Crown's normalised results, which strip out the variance in VIP gambler win rates, were down 4.7 per cent to $368.6 million.

The allegations by Nine's 60 Minutes, The Age and The Sydney Morning Herald have been rejected by Crown via statements to investors and full page newspaper advertisements.

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Crown's results show Chinese high-rollers have pared back spending after a 54.5 percent surge a year ago.

The fall in normalised earnings has hit the group's key properties with Crown Melbourne down 8.6 per cent to $589.5 million, Crown Perth down 10.8 per cent to $221.8 million and Crown Aspinalls in London down 46.5 per cent to $6.4 million.

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Revenue down, costs up

Crown's online gaming business — which comprises Betfair Australasia and DGN Games — has also been struggling, with earnings down by 2.7 per cent to $26.1 million.

Away from direct gambling, Crown's non-gaming revenue was $273.million, down 1.5 per cent, although hotel occupancy at key properties was steady.

JP Morgan analyst Donald Carducci said the key features of the Crown result were higher costs, lower revenues and an uncertain outlook.

'[There was a] material decline in VIP turnover. Melbourne turnover -25.4 per cent, Perth -30.1 per cent and Aspinalls -29.6 per cent,' Mr Carducci wrote in a note to clients.

'Operating expenses grew across the board while [there were] revenue falls in Melbourne, Perth and Aspinalls.'

Mr Carducci noted, while Crown's cash flow was positive and the final dividend was sustained at 30 cents per share, the dividend franking rate decreased to 25 per cent from 60 per cent.

However, S&P Global Ratings analysts said the relative size and stability of the company's non-VIP operations lowered risks in the business overall.

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'Crown's main floor gaming and non-gaming revenue has demonstrated resilience, mitigating volatility within its VIP business,' they noted.

Crown shares were 1.2 per cent higher at $11.56 by 2:20pm (AEST) in a generally falling market, having seen its market value fall around 10 per cent since the Nine Newspapers allegations were aired.

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Topics:company-news, gambling, hospitality, stockmarket, fraud-and-corporate-crime, australia

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First posted August 21, 2019 12:16:39