High-rollers back at SkyCity
SkyCity
$11.9b
2018 turnover
$39.2%
turnover increase
$169.9m
Net profit
10.4%
Profit increase International high-rolling VIP gamblers have returned to SkyCity, helping to drive the casino operator to a record net profit for the June year.
The VIP gambling side of the Asia-Pacific market went quiet late in 2016 after 17 employees at SkyCity’s competitor, Australia’s Crown Resorts were detained in China on suspicion of gambling crimes, including the direct marketing of casinos to large groups in China.
The crackdown ended with Crown’s international VIP business head, Jason O’Connor, and four colleagues, serving 10 months in a Shanghai prison.
SkyCity chief executive Graeme Stephens said the 10.4 per cent lift in the company’s net profit to $169.9 million for the year was largely down to strong finish in May and June, with the international VIP business leading the charge.
“It (the VIP market) is a harder part of the market to predict — it’s a bit more volatile — so it did come in a bit stronger than we anticipated,” he said. “It was quite specific to our international VIP gamblers — the gamblers that we fly in to our properties,” he said. “Sometimes they say they are coming then don’t, but everyone who said they were coming came, plus a couple more.”
SkyCity said all its properties showed an Improved operational performance, led by its international business.
He said it had been a “solid” year but that the return of the high-rollers over May and June had been the “icing on the cake“.
SkyCity had always been conservative in the VIP segment, pre and post-Crown.
“So it’s not like we changed our behaviour, but there has been a rising tide in that part of the industry,” he said. “We would expect our Australian contemporaries to also show big increases, year-on-year,” he said.
The flagship, SkyCity Auckland, achieved record EBITDA of $260.7m, up 3.7 per cent on the previous year. Auckland gaming revenue was up 2.6 per cent while nongaming revenue rose 4.6 per cent on the back of another strong performance from the precinct’s two hotels, with occupancy rates of about 90 per cent.
Stephens says the company’s plan for the Federal Street precinct is starting to take shape, with most of the property acquisitions needed now completed.
SkyCity shares last traded at $4.06, up 8c from Tuesday’s close.