China’s anti-graft campaign hurts Aussie casinos
AUSTRALIAN casino operator Crown Resorts Ltd on Thursday said plunging turnover from Asian high-rollers drove down underlying half-year profit by 9.1 percent, revealing for the first time the financial impact of China’s anti-graft campaign.
The world’s biggest listed casino firm outside China has been rethinking its strategy after Chinese authorities arrested 18 of its sales staff, including its head of international VIP sales, for suspected “gambling crimes” in October.
Excluding a gain from selling most of a one-third stake in Macau-based casino operator Melco Crown Entertainment Ltd, interim net profit was A$191.3 million (US$147.2 million). Crown said it made another A$166.9 million (US$128.2 million) from the Melco sale, boosting its statutory result.
Turnover from wealthy tourists on casino package holidays – largely Chinese gamblers – fell 45.3 percent to A$19.6 billion (US$15 billion) amid Chinese government efforts to shut down illicit cash outflows and casino marketing on the mainland, where gambling is illegal.
“Crown’s Australian operations’ first-half result reflected difficult trading conditions,” Executive Chairman John Alexander said in a statement.
The company, 48-percent owned by Australian billionaire James Packer, offered no earnings guidance, but its shares jumped 6.5 percent in a broadly weaker market on Thursday morning, as investors cheered a special dividend of 83 cents and A$500 million (US$384 million) share buyback.
The special dividend following the sale of the Melco shares came on top of an interim dividend of 30 cents, which was slightly less than the previous corresponding payout.
The stock is still 8.3 percent below its level before the China arrests, reflecting investors’ worries that Beijing’s anti-graft campaign will have long-term negative effects on casino operators’ ability to attract wealthy Chinese players.
Since the arrests, Crown has reversed a decision to split into three listed companies, canceled plans for a new casino in Las Vegas and quit its investment in Melco.
On Thursday it said CEO Rowen Craigie would step down after 10 years and Alexander would assume his responsibilities. Craigie oversaw the global expansion which is now being unwound.
Sydney-listed Star Entertainment Group Ltd, Crown’s smaller Australian rival, last week said it planned to cut its reliance on gamblers from China following the Crown arrests, as half-yearly profit fell 18 percent. – Reuters