With Chinese tourists gone, Australia’s Crown Resorts casino draws local gamblers

Crown previously pegged its future to Chinese high rollers visiting its casinos in Melbourne and Perth
But with borders shut, its net profit has plunged to US$57.5 million for the year to end-June, down from US$290.7 million last year

Australia

Reuters

Published: 1:22pm, 19 Aug 2020

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Australia’s casino giant Crown Resorts on Wednesday said it was betting on domestic gambling to bolster profit, as an international travel ban triggered by the coronavirus pandemic wiped out much of its annual earnings.

Crown, one-third owned by billionaire James Packer, previously pegged its future to well-heeled Chinese tourists visiting its casinos in Melbourne and Perth, with a new A$2.2 billion (US$1.6 billion) resort in Sydney to open later this year.

But with borders worldwide closed, net profit plunged to A$79.5 million (US$57.5 million) for the year to end-June, from a restated A$401.8 million (US$290.7 million) a year earlier. The company scrapped its final dividend payout, against 30 cents per share last year.

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The results reflect the need for a dramatic change of strategy for the company, Australia’s biggest casino operator.

From March through June, Crown was forced to halt gaming activities and parts of other operations at its Melbourne and Perth locations, as government curbs were imposed to control the virus’ spread.

The firm now faces further challenges as Australia struggles to control a second spike of infections in Melbourne that forced the government to recently reimpose curbs, leading Crown to close the doors at its Melbourne site once again.

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“Realistically, it’s not going to be much of a Chinese New Year for international travel,” said CEO Ken Barton on a call with analysts, referring to the annual Chinese holiday season, taking place in mid-February next year.

“It may well be that, before we see international travel, people are able to travel to New South Wales (from elsewhere in Australia),” he added.

Sydney, the state capital of New South Wales, is under less severe restrictions of movement than Melbourne in Victoria state.

A flare-up in infections in Victoria forced authorities two weeks ago to lock down Melbourne and impose a nightly curfew and shut large parts of the state’s economy.

Health care workers carry out Covid-19 tests at a drive-through testing facility in Melbourne on August 18, 2020. Photo: AAP via Reuters

Crown did not give a profit forecast, but said “main floor” gambling revenue – as opposed to “VIP” revenue from upscale tourists – at its Perth casino was up 18 per cent in the first six weeks of the new financial year.

The company on Wednesday also revealed that it had collected A$111.3 million of government assistance through an emergency scheme to help lockdown-affected companies pay staff wages.

Crown added that based on current trading levels, its venue at Perth was not likely to qualify for the government’s JobKeeper support programme beyond September 27, but the Melbourne operation would, given its continued closure.

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Meanwhile, fresh outbreak of infections in Australia’s hard-hit Victoria state eased further on Wednesday, as the country agreed a deal to secure a potential Covid-19 vaccine that it plans to roll out cost-free to citizens.

Prime Minister Scott Morrison said the country was also looking for other vaccine deals, including with the University of Queensland and its partner, Australian firm CSL.

CSL estimates first doses of the University of Queensland vaccine will be available for emergency use by the middle of 2021, CEO Paul Perrault said on Wednesday.

Morrison said Australia is also talking to its Pacific neighbours, including Indonesia, Papua New Guinea and Fiji, about supplying vaccine.

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