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UPDATE 1-Winning hand lifts Australia's Star Entertainment to record profit
August 23, 2017 / 1:20 AM / 3 months ago

UPDATE 1-Winning hand lifts Australia's Star Entertainment to record profit

(Adds normalised profit, CEO quote, shares and outlook)

Aug 23 (Reuters) - Australia’s Star Entertainment Group Ltd posted a record full-year profit on Wednesday, beating expectations as a higher-than-normal win rate made up for a fall in turnover from North Asian high-rollers.

The country’s No. 2 casino operator lifted its dividend and said revenue from its biggest casino in Sydney grew after it expanded the gaming floor there, also offsetting the decline in the VIP business.

Its reported net profit for the year to June 30, 2017 rose 36 percent to A$264.4 million ($209.22 million) from A$194.4 million a year ago. That was ahead of an average of six analyst forecasts for net profit of A$233.1 million, according to Thomson Reuters I/B/E/S.

The arrest in October of 19 employees of the world’s biggest-listed casino operator outside China, Crown Resorts Ltd , has upended the China-focused business model of Australian betting houses.

“The North Asian disruption is lingering,” Chief Executive Matt Bekier told analysts on a conference call on Wednesday.

“We dropped a long way in November and December and it’s going to take a little while to climb out of that hole. We’ve been able to mitigate some of that through diversification.”

Star is overhauling its business model to reduce its reliance on Chinese gamblers, previously the backbone of its business, by boosting its hotel offering and seeking visitors from elsewhere.

The company said annual turnover from overseas visitors - mostly wealthy Chinese - slipped 19.9 percent to A$39.7 billion.

Similar slumps in visitors hurt full-year profits for rivals Crown and New Zealand casino operator Sky City Entertainment Group

Adjusting the win rate to average levels, Star’s “normalised” net profit fell 11.1 percent to A$214.5 million.

The company said trading in 2017-18 had so far seen more domestic gamblers playing in its Sydney and Gold Coast casinos, but did not forecast earnings or profits.

Shares in the company rose 2.6 percent to A$5.23 in morning trade as the broader S&P/ASX 200 rose 0.25 percent.

Capital expenditure in the year was A$420 million, with similar expectations for fiscal 2018, Star said.

The company declared a final dividend of 8.5 Australian cents per share, up from 7.5 Australian cents per share a year ago.

$1 = 1.2637 Australian dollars Reporting by Chris Thomas; Editing by Michael Perry

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