SkyCity profit slumps
Casino company SkyCity's profits have slumped and the company warns revenue from new gambling concessions is unlikely to materialise until the end of the year.
SkyCity Entertainment Group reported net profit after tax of $61.1 million, for the six months to December 31, down 8 per cent on the same period last year.
Morrison said the drop was in line with guidance. Trading this afternoon saw SkyCity shares rise 11c, or 3 per cent, to $3.71.
The company, with significant operations in Australia, blamed the lower profit on the high New Zealand dollar and soft economic conditions on both sides of the Tasman.
According to the company's own calculations, the high kiwi in relation to the Australian dollar was responsible for only $2.4m of the $8m reduction in normalised net profit.
Revenue from its flagship Auckland casino were flat, while profits nudged upwards after $2.5m of marketing costs were cut.
Operations at the group's major operations in Adelaide and Darwin were down 13 per cent and 10 per cent respectively. The company blamed the downturn on construction in Adelaide and "cost pressures" in Darwin.
Chief financial officer James Burrell told a media conference this morning that while economic conditions were picking up in New Zealand, the opposite was true in Australia.
"In Australia there are clearly still challenges for Australian businesses," he said.
"We would say it is more buoyant in New Zealand, from an economic point of view, and we do believe there's a growing momentum."
Morrison said a deal stuck with the South Australian government to spend A$300m, ($326m) to build a convention centre and upgrade its Adelaide casino had been formalised and would go live on February 15. This would see new gaming machines and tables at the casino come online this weekend.
In Auckland, Morrison said concessions struck with the New Zealand government - including a boost to the number of gambling machines and tables - would only come into effect once a construction contact for a $402m convention centre was signed.
He hoped to start receiving construction tenders in May.
"We would be hopeful of some time in September, and there's probably a lag of a couple of months while we get it up and running," Morrison said.
An interim dividend of 10 cents will be paid on April 4, consistent with what was paid in the first half last year.
Skycity also announced it had appointed managers and designers for its International Convention Centre project, with Morrison saying the firm's outlay is "an investment in New Zealand's future".
SkyCity Auckland general manager Simon Jamieson will have overall responsibility for the project as group general manager, while Andrew Buckingham has been appointed as project director.
Architect firm Warren and Mahoney will be the lead consultancy.
- Fairfax Media