Casino news from http://www.stuff.co.nz/
It is often said of casinos that the house never loses. But SkyCity Entertainment Group's Auckland VIP customers have won about $10 million off the house this year, leading to the casino operator warning of a fall in annual profit.
As well, high petrol prices were cutting into customers' disposable income, SkyCity said yesterday after announcing its net profit for the June 2007 year would be between $100 million and $110 million, compared with analysts' expectations for profit roughly in line with 2006's $120 million.
"The market (consensus forecast) is going to have to come down $10 million to $15 million," Tower Asset Management fund manager Paul Robertshawe said. "That's relatively chunky for a business that's supposed to be defensive." SkyCity shares fell 6 cents to $5.12 this week.
Chief executive Evan Davies said the number of visitors passing through SkyCity's Auckland operations, which contribute 67 per cent of annual group operating earnings, had remained steady. However, customers were spending less money.
Meanwhile, house losses at the Auckland VIP commission tables year-to-date totalled nearly $10 million.
"At the end of the day in this business sometimes you win and sometimes you lose," Mr Davies said. "And we lost." He said without these losses SkyCity would not have warned on full-year profit. In addition, the recent unexpected strengthening of the New Zealand dollar against its Australian counterpart, if sustained, was likely to push SkyCity's base tax rate up to 30 per cent from 28 per cent, costing the company about $3 million. SkyCity owns casinos in Adelaide and Darwin.
Continuing high fuel prices were also impacting SkyCity, which is also New Zealand's biggest cinema owner, Mr Davies said. Speculation has heightened in the past month of a takeover bid for SkyCity from Australian gambling group Tabcorp. However, Mr Davies said he was not aware of any move on SkyCity by a rival. Nor did SkyCity have any potential acquisitions under active consideration.
Mr Robertshawe said it was almost inconceivable SkyCity's share price would fall below $4.50 given the possibility of merger or acquisition.
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