Crown Resorts shifts focus to home and away from Macau

Crown Resorts shifts focus to home and away from Macau

Wednesday, August 17, 2016
The Australian casino operator appears to be wearing thin on patience

The 10% equity sale of Crown Resorts Ltd (Crown) stake in Melco Crown Entertainment (MCE) has propped up the Australian gambling operator’s 2016 year-end results, with a reported AUS $948 million (£555 million) in profits.

Presenting its regulatory filing, Crown detailed a tale of two properties as its domestic casinos of Perth and Melbourne would sustain corporate performance reporting 2016 EBITDA of AUS $949 million (£550 million), a flat performance on the previous year’s revenues.

However, its 2016 performance has been dragged down by continued declines in its Macau MCE portfolio, which saw a decline of 65% on FY 2015 performance as it contributed AUS $42.7 million (£25 million) in corporate profits.

Crown Resorts’ governance continues to defend the firm’s position within the Macau market, stating that its Asian ambitions remain ‘long-term’.

Nevertheless, leisure magnet James Packer’s interest in the Chinese province appears to have cooled significantly, as Macau’s industry slump continues. Following its May sale of MCE equity at a confirmed AUS $602 million (£350 million), business news sources reported that Packer’s advisory team were seeking to limit Crown’s interests in Macau.

Pointing the company in a new direction, Robert J Rankin, who replaced Packer in August 2015 as Crown’s chair, is reported to want to implement a ‘more conservative’ strategy, focusing on the home properties.

At present its appears that Crown executives are impatient for Macau to change its focus to becoming a ‘mass market’ destination, as its gambling industry addresses the issue of declining VIP customers.

"I don't think anyone is saying the VIP levels in Macau are going to return to the levels that we saw three or four years ago,” stated Crown Resorts chief executive Rowen Craigie.

Totally Gaming Says: Established in 2004, Crown’s MCE joint-venture with Melco International was one of the first foreign gambling operators to enter the Macau market, as Crown looked to become a major stakeholder on the Cotai Strip. Packer has reduced his influence to that of just ‘a shareholder’ at Crown, however given that he owns 53% of a AU$9.7bn company, any strategic movements on Macau and Crown’s investment in MCE will likely be decided by the magnet.

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