Regular punters boost SkyCity

SkyCity has has recorded better fourth-quarter sales and earnings at all its casinos. Photo / Greg Bowker

SkyCity Entertainment's profits are set to be boosted by patrons who are gambling more regularly even though they are spending less.

The casino operator yesterday said it was on track to beat market profit forecasts with net profit after tax for the 2009 year in the range of $113 million to $116 million.

In April, SkyCity indicated it was expecting to achieve a result within the then current analyst range of $99 million to $106 million.

The profit upgrade saw its share price leap 19c to $3.05, up 6.6 per cent on the day.

The company expected its underlying and reported earnings, (ebitda) for the 2009 year to be about $300 million.

About two-thirds of the company's revenue comes from its Auckland casino, hotel and entertainment business, the bulk of that on the high margin gaming floor from New Zealand-based gamblers.

Chief executive Nigel Morrison said: "They've reduced their level of expenditure but are entertaining themselves more frequently."

The company has recorded better fourth-quarter sales and earnings at all its casinos - Auckland, Adelaide and Darwin.

Morrison said work at Auckland started 18 months ago to remodel the gaming floor and build new bars, new snack bars, hotel renovation and different entertainment had made the venue more attractive and this was paying dividends.

"We've been pretty focused on driving revenues and not cutting costs."

Overseas visitors to its Auckland business had held up.

The casino had benefited from the upsurge in Australian tourist numbers and Asian tourists visiting the venue in the six months to the end of June were up on the same period last year.

However, the swine flu outbreak had badly affected Chinese tourist customers during the past few weeks, he said.

"It's just too hard to fly so everybody is staying at home."

Morrison said the casino at Adelaide had been turned around.

"We're now performing as we should in Adelaide than we have in recent times."

It had been operating more as a nightclub than a casino but this had been rectified with new gaming features and a changed fitout.

Forsyth Barr analyst Jeremy Simpson said yesterday's announcement was a sign the new management team had made its mark now it was familiar with the business.

"We're expecting them to start delivering on this over the next six to 12 months - these things don't happen overnight."

While the past year had "not been spectacular" for SkyCity it was doing better than the pub and club sector overall which was down about 5 per cent, Simpson said. "I think it shows that it's a reasonably resilient business if it's done well."

Morrison said with the equity capital raising in April to shore up the balance sheet being over-subscribed, net funding cost for the fourth quarter was less than anticipated. More regular forecasts were likely.