Sky City shares soar on profit forecast jump

Photo/The Aucklander

Shares in Sky City Entertainment Group soared today after the casino operator said it expected to beat market profit forecasts as fourth quarter income had improved significantly.

Sky City, which operates casinos in Auckland, Hamilton, Queenstown, Adelaide and Darwin, as well as hotels and cinemas, has managed the improvement despite a slowing economy and weaker consumer spending.

Net profit after tax for the 2009 year was now forecast in the range of $113 million to $116 million, after revenue and earnings improved across core casino operations in Auckland, Adelaide and Darwin towards the end of the financial year.

That was well above analysts' annual net profit range of $99m-$106m at the time of Sky City's capital raising in April, and in line with last year's result after adjusting for a large write-down in the cinemas business.

As a result, Sky City shares jumped more than 20c to a session high of $3.10, the highest in eight months after hitting a seven-year low of $2.50 this year.

Last year, Sky City saw annual net profit fall to $49.9m after the write-down. However, net profit rose 19 per cent to $111.9m once adjusted for non-recurring items.

The company had focused on repaying debt and tried to improve profitability at its casino businesses.

"It has been a very pleasing fourth quarter and second half for Sky City, with our operations both in New Zealand and in Australia performing above expectations," chief executive Nigel Morrison said.

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

Also, with the April equity capital raising being over-subscribed, net funding cost for the fourth quarter was less than anticipated.

Details of the 2009 result are due on August 26.

- NZPA