-- Crown reports net profit of A$513.3 million, up 53%
-- Says profit helped by strong result from Melco Crown Entertainment joint venture in Macau
-- Faces increased competition from Asian casino resorts
(Adds chief executive's remarks from fifth paragraph, background throughout)
By Gavin Lower
MELBOURNE--Crown Ltd. (CWN.AU) said net profit in fiscal 2012 grew 53% on year, even as the company's Australian properties were hit by competition from Asian casino resorts for lucrative big-spending gamblers.
Net profit in the 12 months to June 30 rose to 513.3 million (US$542.6 million) helped by a strong result from its Melco Crown Entertainment Ltd. (6883.HK) joint venture in Macau, Australia's largest casino operator by market value said in a statement Friday.
Its Australian casinos--in Melbourne and Perth--were hit by competition from new gambling-resort developments in Singapore for Asia's so-called high rollers, or VIPs, as well as by weakening consumer sentiment in Australia.
Normalized profit, which the company says best reflects its performance, was A$415 million, up 22% from the previous year.
"We continued to see some evidence of weak consumer sentiment, which has affected some segments of the business, particularly in the second half, while the premium markets maintained their strength," Chief Executive Rowen Craigie said in the statement.
Crown, whose chairman, Australian billionaire James Packer, owns a majority stake through his Consolidated Press Holdings Ltd., said it would pay a final dividend of 19 Australian cents a share.
The casino operator said that while revenue from its VIP division increased by 19% over the year, the growth was generated at a lower margin because of changes in the mix of the business, higher taxes at its Melbourne property, and the increased competition from Asia.
"Our strategy to source new customers from China also continues as we seek to offset the ongoing impact of the Singapore integrated resorts on our VIP business," Mr. Craigie said.
The company said it received A$135.8 million as its share of Melco's profit for the year. The joint venture owns the Altira Macau and City of Dreams hotel-and-casino complexes in Macau, China.
In Australia, Crown is aiming to ramp up its attractiveness to overseas tourists and gamblers, as well as to domestic holiday and business travelers. Earlier this month, it announced plans to develop a new luxury hotel at its Burswood hotel-and-casino complex in Perth for A$568 million.
The company is also looking into developing another luxury hotel-and-gaming facility for big spenders in Sydney in New South Wales state.
Crown faces a hurdle to its Sydney plans because rival casino company Echo Entertainment Group Ltd. (EGP.AU) holds an exclusive licence to operate casinos in New South Wales until 2019. Crown owns 10% of Echo and has applied to regulators to further boost its stake.
Analysts have said Crown's development plans in Sydney dampen speculation that it may make a takeover bid for Echo, and now wonder whether it may seek an agreement to use its rival's gambling licence to start the new gaming facility, which would require separate regulatory and government approvals.
Malaysian gaming giant Genting Bhd. (3182.KU) has subsidiaries that together own 9.9% of Echo. It too has asked Australian regulators for permission to increase its stake, prompting speculation that it may similarly be looking to take over the group.
Write to Gavin Lower at email@example.com
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(END) Dow Jones Newswires
August 09, 2012 22:05 ET (02:05 GMT)
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