July 31, 2009 / 6:33 AM / 10 years ago

Rank profit boosted by casinos

LONDON (Reuters) - Bingo hall and casino operator Rank (RNK.L) reported better-than-expected first-half pretax profits on Friday, boosted by a strong performance from its casino division, sending its shares sharply higher.

People walk past a gambling establishment in London's Chinatown December 3, 2007. REUTERS/Alessia Pierdomenico

Rank, which operates Mecca Bingo, Grosvenor Casinos, and Top Rank Espana, reported a first-half underlying pretax profit of 24.7 million pounds, up from 17.6 million.

The consensus market forecast had stood at 20.4 million pounds, according to a Reuters poll of analysts.

Shares in Rank were up 8 percent to 75.5 pence at 9:35 a.m., having been up as much as 12 percent.

Rank said it had benefited from a strong performance from Grosvenor Casinos and a stabilisation in trading at Mecca Bingo.

Operating profit at the group’s 34 Grosvenor Casinos increased by 17.6 percent to 14.7 million pounds, driven by increased customer visits and in spite of a lower than average win margin in the London casinos, the company said.

“It’s a combination of factors that has led to that admissions growth,” Chief Executive Ian Burke told reporters on a conference call. “We changed the management team a year ago. We’ve developed the product, improved the service and improved the food and beverage offering.”

Investec Securities lifted its forecast for underlying pretax profit by 26 percent to 43 million pounds.

“Casino is the star of the show, with strong growth in provincial casinos combining with management initiatives to boost margins,” said Investec analyst Matthew Gerard.

Rank said it would not pay an interim dividend because the economic environments in Britain and Spain remained difficult.

The company, which suspended dividend payments in December 2007, said it would resume dividend payments once trading conditions and the market outlook improve.

Editing by Mike Nesbit and Simon Jessop

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