Drop in profit for SkyCity

Traffic disruption around SkyCity’s main casino in Auckland is making it tough to attract new customers who find it hard to get there, chief executive Graeme Stephens says.

But the casino operator was confident of turning around the fall in its ‘‘cream on top’’ VIP high-rollers, and has seen a ‘‘renewed focus’’ at the construction site of its delayed convention centre.

The arrest of billionaire gaming mogul James Packer’s workers in China saw VIP spending at SkyCity drop by nearly a third this year, while a difficult economic environment in Australia’s Northern Territory led to a write down of its Darwin business by $102m.

This caused net profit after tax to fall 69 per cent to $44.9 million for the year to June 30, as revenue dipped 7 per cent to $1.02 billion. Without the impairment, net profit after tax would have been up by 1.3 per cent.

SkyCity chief executive Graeme Stephens said the Darwin write down was ‘‘a bit of a red herring’’ which was the result of an underlying problem which had been coming for the last year or two.

Regulatory changes in mid-2015 had seen the number of gaming machines at pubs and clubs in Darwin near SkyCity’s casino increase by 75 per cent.

Stephens said the more pressing issue for the casino was a bit of a slowdown in Auckland, which was about 80 per cent of its business. It recorded record gaming revenue but year-on-year growth was more modest thanin previous years. Stephens said regular customers were still coming, but disruption in the central business district caused by major projects such as the City Rail Link had made it ‘‘hard to get to’’ the casino.

SkyCity was working with Auckland Transport to keep a handle on transport trends. ‘‘It’s tough to get large growth with the disruption around us.’’

Revenue from SkyCity’s international business, what it calls its international VIP gamblers, dropped 30 per cent to $8.7b. But the VIPs had always represented the ‘‘cream at the top’’ for SkyCity, and rises and falls were not going to change the entire company’s fortunes.

VIP gambling in 2016 had been a ‘‘massive step up’’, and this year’s reduction was more in line with where revenue had been in 2015.