Smoking ban affects earnings more than forecast

A significant deterioration in charities' gaming revenues in the past few months shows Sky City has underestimated the impact of the smoking ban, Macquarie Equities says.

Macquarie analyst Steve Wheen surveyed a number of large charitable trusts that operate slot machines in New Zealand and found their gaming revenues had fallen between 11 per cent and 17 per cent compared with the levels of the previous year - a significantly worse contraction than the 6 per cent to 13 per cent evident in mid-January.

"The smoking ban impact felt by the charitable trusts continues to support our notion that Sky City has underestimated the potential impact of the ban," he said.

"No other operator [other than Sky City] is expecting to return to a period of growth within 12 months."

But a spokeswoman for Sky City said the company's experience had not been significantly different from its initial projections.

Sky City had previously estimated an impact of the first six months of the ban at about $10 million in the 2005 financial year, with a lesser impact in the following six months and the impact abating within a year.

In February, the company said it was comfortable with analysts' forecasts for 2005 - provided pre-December predictions for the impact of the smoking ban were in line with the actual outcome.

At that time, analysts were forecasting the company would report a net profit after tax of between $114 million and $119 million.

Wheen has cut his forecast for the full year to $108 million from $112 million.