Crown Resorts reports profits due to Melco sale

Profits have almost doubled at Australian casino company, Crown Resorts, despite VIP turnover dropping significantly.

The casino giant, which has venues in Melbourne and Perth, released its annual results for the financial year ending June 20, 2017, at the end of last week.

Crown Resorts reported an annual net profit of $1.9 billion which is almost twice the amount the casino giant reported this time last year.

Although the casino reported positive results, the casino’s VIP division performed poorly over the last 12 months.

On closer inspection, the strong annual figures were due to the sale of its stake in Melco Resorts and Entertainment.

Without the transaction, the profit would have been $343 million, which is a 16 percent decline compared to this time last year.

Additionally, VIP turnover fell 48.9 percent to $33.3 billion.

The poor VIP segment results have been attributed to the incident in mainland China last year, where 19 employees and former Crown Resorts staff members were arrested for gambling-related crimes.

The case was tried in July, and the remaining Crown employees who are serving their sentence in a Shanghai prison are expected to be released this week. Among them is the company’s head of international VIP operations, Jason O’Connor.

Normalised revenue at Crown Resorts’ venues fell 12.7 percent to $2.82 billion due to the drop in VIP play. Normalised EBITDA also fell 10.7% to $833.7 million. Additionally, main gaming floor revenue dropped by 1.4 percent to $1.66 billion.

Executive Chairman, John Alexander, said the company would wait for the China incident to be completely resolved before reassessing its long-term strategy.

“Until this is finally resolved we are stepping back from an aggressive position in the VIP market,” Alexander said.

Crown Melbourne’s VIP revenue has been hit the hardest, dropping 49.7 percent to $340.3 million. Normalised revenue for the company dropped by 13.7 percent to $1.99 billion. Crown Perth recorded a 46.1 percent drop in VIP revenue to $109.3 million, and normalised revenue of $830.1 million.

“Crown’s Australian operations’ full year result reflected difficult trading conditions,” Alexander said.

“Total normalised revenue across Crown’s Australian resorts declined by 12.7%.

“This decline was due primarily to the reduction in VIP program play revenue in Australia, which was down 48.9% on the prior comparable period.

“Main floor gaming revenue also decreased by 1.4%, with Melbourne flat and softness in Perth.”

The company is also in the midst of building its Sydney venue, featuring a VIP-focused casino in Barangaroo.

James Packer returns to Crown Resorts board

In January, the company announced that James Packer would be returning to the Crown Resorts board.

Last Thursday, Packer’s position became effective.

Packer originally stepped down from the board in 2015 but announced his return at the start of the year, likely to help with damage control following the China arrests.

“I would like to welcome James back to the Board of Crown,” Alexander said.

CEO of Press Holdings, Guy Jalland, who replaced Robert Rankin earlier this year, has been appointed as a director.

“Crown values the experience and contribution that each of James and Guy Jalland will bring to the Board,” Alexander added.