CEO pays price for Crown tumble

CEO pays price for Crown tumble

Monday, February 27, 2017 Posted by Scott Longley
Australian VIP business halves after China arrests

There was further blood on the carpet in the boardroom at Crown Resorts last week after the company moved to sack its chief executive and instituted a flatter management structure to better reflect the changed circumstances at the company.

Crown Resorts has been through a tumultuous six months as evidenced by financial results last week that showed reported EBITDA tumbling over 12 percent to A$399m in the period to December driven largely by a huge drop in VIP play at its Australian resort casinos.

The cause was the detention in October of Crown Resorts’ VIP marketing executives in China.

On the same day as the results announcement, the company also released the news of the departure of boss Rowen Craigie and said that his responsibilities will be assumed by current executive chairman John Alexander, long-term Packer family lieutenant. James Packer himself recently returned to the board at Crown Resorts.

The company said the change at the top was driven by the recent decisions to reduce Crown’s investment in the Macau operator Melco Crown and to discontinue the company’s plans to build a resort property in Las Vegas. The company sold A$167m worth of Melco Crown shares during the period.

Alexander said of the new management structure that it will “ensure that for the near term, there is a major focus on the performance of Crown’s key Australian operations, its existing projects, Crown Sydney and Queensbridge Hotel Tower and Crown's digital businesses."

The assumption of further responsibilities comes only a month after Alexander replaced previous chairman Robert Rankin.

Operating revenue fell 5.6 percent to A$1.77bn and post-tax net profit slumped 10.8 percent to A$183m for the half year. Alexander said the results reflected “difficult market conditions.”

Even so, the shares responded well to the news of the results, rising 8 percent on the day, after the company restated its dividend policy and added that it was now committed to paying out 60 cents per share a year. It also said it would commence a share buyback programme later in the year.

Totally Gaming says: Everything that Crown Resorts is saying publically at present speak of retrenchment. The reduction of its stake in Melco Crown and the end of its interest in Las Vegas suggest the company has no further international ambitions and the flatter management structure now instituted is a reflection of the narrowing of its sights.

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