SkyCity ready for growth

SkyCity Entertainment Group is proceeding with growth plans, despite a lower profit, announcing it will build a $180 million five-star hotel in Auckland.

The NZX-listed casino firm yesterday reported its annual net profit fell 22.6 per cent to $98.5m. Revenue eased 4.8 per cent to $821.5m.

Chief executive Nigel Morrison said the result should be seen in light of the high exchange rate and the disruption caused by redeveloping its Adelaide casino. ‘‘I think at a headline level it’s not great, but I think when you look at it and understand it there are other factors at play,’’ he said.

SkyCity shares yesterday closed up 7 cents at $3.62 on the result.

SkyCity said the exchange rate, relative to the Australian dollar, had caused trading earnings to slide $9.9m, while the the costs from Adelaide contributed A$4.4m (NZ$4.8m) of the decline.

‘‘Disruption [in Adelaide] has been significant, and to be fair, more than we expected,’’ Morrison said. Work in Adelaide was due to be completed by Christmas.

Morningstar senior equities analyst Nachi Moghe said the turnaround at Auckland, which contributes two-thirds of SkyCity’s earnings, was promising. ‘‘I’m picking a better 2015.’’

‘‘All the refurbishment and restaurants opening up are adding to the appeal in Auckland and Adelaide. It’s going better than expected,’’ he said.

The hotel plans were likely to generate good returns, as current occupancy levels showed excess demand existed.