Profit rises at SkyCity

Casino group SkyCity has reported a 12% boost to half-year net profit as higher returns from high-roller gamblers added to modest growth from its New Zealand properties.

Chief executive Graeme Stephens says the result was largely in line with expectations.

“Despite disruption from capital works in Auckland and Adelaide and a slightly less favourable New Zealand economic environment, we remain confident we can continue to deliver growth from our existing assets as well as the new projects in the pipeline.”

Net profit for the six months to December was $93.5 million, up from $83.8 million in the same period a year earlier.

Revenue was up 4% to $504 million.

SkyCity said there had been a positive change in construction on-site at its big project in Auckland – the International Convention Centre and associated Hobson St hotel.

“Fletcher Construction continues to target completion of the projects around the middle of 2019, which is a six-month delay from the contracted dates,” SkyCity said.

“We remain comfortable with our contractual arrangements, which provide for liquidated damages that should mitigate our losses through delay but legal challenges from Fletcher Construction are possible. Overall, we expect our investment in the projects to be in-line with our original budget. We continue to escalate our sales and marketing efforts to confirm the pipeline of convention bookings and, pleasingly, we have secured six major international conferences for 2020.”

SkyCity said the process of selecting a contractor for the expansion of its Adelaide casino was well advanced and construction of the main works was expected to begin by the end of this year.

The budget for Adelaide remains at about $A330 million, SkyCity said, and completion is expected in early 2021.

A review of options for the company’s Darwin casino is continuing, the company said.

“A full (or partial) sale of our interest in the property remains a possibility at the right price but there is no urgent time pressure given the property is profitable and cash generative – particularly with the recent stabilisation and slightly improved performance.”

The casino’s licence has been extended by five years to 2036.

An interim dividend of 10c a share was declared, unchanged from a year earlier.