SkyCity full-year profit rises

See also: SkyCity seeks government backing for Queenstown development and UPDATE: SkyCity result mixed, analyst say

Casino and hotel company SkyCity Entertainment Group's [NZX: SKC] full-year profit rose 31% as an improved win rate for its international business and strong growth in Auckland made up for a disappointing performance in Adelaide.

Profit after tax rose to $128.7 million, or 22c a share, in the year ended June 30, from $98.5 million, or 17c, a year earlier.

Sales for the Auckland-based company rose about 12% to $1 billion. SkyCity also provided 'normalised' figures, to reflect the performance of its underlying business, which showed revenue rose 8.7% and profit rose 8.8%.

The company says its improved results reflected 'continued strong growth in Auckland," strong growth group-wide in its international business - the term it uses for 'high roller' gamblers - "solid growth" in earning in Hamilton and earnings growth at Darwin. By contrast, Adelaide had a "disappointing performance."

In Auckland, SkyCity reported record results, with normalised revenue up 13% in the year and normalised earnings before interest, tax, depreciation and amortisation gaining about 14% to $247.8 million.

"This growth continues the positive recent momentum across all business segments, with the property now having delivered six consecutive quarters of Ebitda growth," the company says.

"Going forward, the Auckland property will also benefit from the activation of the New Zealand International Convention Centre gaming concessions, which are expected to start by the end of 2015 following the signing of a binding building works contract" for the centre, SkyCity says, referring to the deal with the government to build a convention centre in exchange for increased gaming machines.

SkyCity Hamilton had a 4.5% gain in normalised revenue to $50.6 million, while normalised Ebitda rose about 16% to $19.9 million. Its combined Queenstown operations had normalised revenue growth of 34.6% to $18.3 million and normalised Ebitda of $2.9 million.

SkyCity Darwin recorded Ebitda growth of 7.2% on what it says was flat local revenue "in a challenging market."

The company's international business lifted normalised revenue by 43% to $125.6 million. Normalised Ebitda rose 35% to $26.4 million. The actual win rate of 1.36% in the year was broadly in line with the theoretical win rate of 1.35%.

Adelaide Casino's performance was hampered by refurbishment works completed in January. It says modest 4.8% growth in normalised revenue to $A174.1 million was offset by shrinking margins, resulting in a 19% drop in normalised Ebitda to $A27.3 million.

The company says trading in July showed "a continuation of the momentum" seen in the second half of the 2015 year, with "strong performances" in Auckland, Hamilton and the international business.

Ebitda margins improved overall for the group compared to July last year "at all properties except in Adelaide and for international business," it says.

SkyCity says it currently has enough debt funding to meet expected funding requirements until at least the start of 2018 but is continuing to investigate a potential New Zealand retail bond issue following the repayment of capital notes in May.

The company will pay a final dividend of 10c a share, imputed to 25% for New Zealand investors.

The shares last traded at $4.29 and have gained 11% this year.

(BusinessDesk)