James Packer, Australia’s third-richest man, stepped down as chairman of Crown Resorts Ltd. as he seeks to focus on developing the casino group’s resorts overseas.
Packer, with a net worth of $4.6 billion according to the Bloomberg Billionaires Index, will remain a director of the company and continue to hold a majority stake, Melbourne-based Crown said in a statement Thursday as it reported annual earnings that met analyst estimates. Shares slumped as much as 6.4 percent in intraday trading, the most since 2011, before paring declines.
Packer said he’d focus on resorts that Crown is developing around the world, which include a planned casino in Las Vegas and a hotel for high-rollers on Sydney Harbour due to open in 2019. He recently sold his six-level Sydney harborside mansion, signaling he intends to spend less time in Australia’s largest city.
“His departure is a big loss and it’s not like a Packer not to see something through to completion,” Evan Lucas, a market strategist at IG Ltd. in Melbourne, said by phone. “The result was a little bit weaker on pretty much every metric and him leaving is a major problem. Where is Crown’s growth?”
Net income after adjusting for one-time items and an unusual rate of winnings was A$526 million ($389 million) in the 12 months ended June 30, Crown said. That’s a drop of 18 percent from a year earlier and matched the A$527 million average of 10 analyst estimates compiled by Bloomberg.
Crown shares closed down 3.2 percent at A$13.09. Echo Entertainment Group Ltd., Crown’s main domestic competitor, rose 3.4 percent to close at a record A$5.15.
Robert Rankin, a former Deutsche Bank AG banker and the chief executive of Packer’s family company Consolidated Press Holdings Ltd., has been appointed as Crown chairman.
“Rob Rankin has my complete trust and respect as an executive and he will do an outstanding job as chairman,” Packer said in a statement. “Crown has a pipeline of resorts globally and this is where the majority of my time will be spent.”
Packer will continue as a director of Crown and remain co-chairman of the Alon Resort project in Las Vegas and Melco Crown Entertainment Ltd., which owns Macau’s City of Dreams and Studio City resorts.
Packer has reached agreement with Crown to sell a 50 percent stake in his rural property at Ellerston, in the Hunter Valley north of Sydney, the company said.
Crown will pay Consolidated Press A$60 million for the stake in 1,400 hectares of land including luxury accommodation, a golf course, a go-cart track, cinema, several swimming pools, and other attractions. The land will be used for entertaining high-rollers from Crown’s planned Sydney casino.
Packer is stepping down at a time when Crown faces challenges both at home and abroad.
Crown’s share of normalized net profit from its 34 percent stake in Melco Crown slumped 45 percent to A$161 million. Macau’s casino revenue fell 35 percent from a year earlier in July. The city “is currently experiencing a difficult period which has adversely affected all casino operators,” Crown said in a statement Thursday.
At Crown Perth, revenues from the main gaming floor increased just 2.6 percent amid a slump in Western Australia state’s mining industry.
The fall in Crown’s net income compares to a 38 percent gain to A$219 million reported by Echo in annual results Wednesday. A consortium led by Echo last month beat off competition from Crown and Greenland Investment Pty. to develop a new resort in the center of Brisbane.
Echo’s Sydney and Gold Coast casinos seem better placed to benefit from growing Chinese tourism to Australia, said IG’s Lucas.
“Clearly Queensland is seen as a better growth market for Asian clients,” he said. “It’s a hard time for Crown at the moment.”