SkyCity Entertainment expects full year earnings to be below or flat on last year

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SkyCity Entertainment forecast normalised earnings before tax for the year ended June of between $290 million and $310m.
Photo: RNZ / Marika Khabazi

Casino operator SkyCity Entertainment expects its full year operating earnings to be below or flat on last year as it faces lower revenue here and in Australia, and uncertainty about taking back its carparks.

The company forecast normalised earnings before tax for the year ended June of between $290 million and $310m, which compared with last year’s $310m, and its October update of a “modest year-on-year increase”.

It forecast a full year after tax profit of between $125m to $135m against last year’s $138.8m.

“The key drivers to this change in earnings guidance are a reduction in electronic gaming machine revenue across the New Zealand sites, reflecting continued cost-of-living pressures and economic uncertainty, which is impacting discretionary consumer spending,” the company said in a statement to the NZX.

It said its Adelaide casino was also expecting lower revenue because of legal and compliance cost pressures and it was reviewing the casino’s costs.

In addition, a delay in settling its repossession of its Auckland car parking operation was hitting earnings, despite a legal ruling in the company’s favour on settling the matter.

SkyCity said it was also investing more in its online gaming business, currently operated out of Malta for legal reasons, as it waited for changes to New Zealand law to allow it to be operated locally.

“Whilst potential regulation remains at an early stage, SkyCity is optimistic about the medium-term earnings opportunity this offers the group.”

It said the forecast did not include an allowance for a possible suspension of its local licence for an alleged breach of responsible gambling rules which is being investigated by the Gambling Commission.

SkyCity also faces potential heavy penalties for breaches of Australia’s anti-money laundering rules by the Adelaide casino.