Crown First Half Earnings Fall 34% on Echo Casino Writedown
Crown Ltd. (CWN), the casino company controlled by Australian billionaire James Packer, posted a 34 percent fall in first-half profit as it wrote down the value of its stake in rival Echo Entertainment Group.
Net income fell to A$181 million million ($186 million) in the six months ended December, from A$274 million a year earlier, the Melbourne-based company said in a regulatory statement today. That compares with the A$187 million median estimate of six analysts surveyed by Bloomberg News.
Crown bought 10 percent of Echo, operator of Sydney’s only casino, last year as it seeks a gambling venue in Australia’s largest city and finishes refurbishment at casinos in Melbourne and Perth. Packer has announced plans to open a rival project targeting high-rollers at the Barangaroo development site across the harbor from Echo (EGP)’s Star casino. Excluding one-time items, profit after tax fell 15 percent to A$233 million as high- rolling gamblers won more games at its tables.
“The market is effectively pricing Crown’s domestic assets at a discount to slow-growing U.S. regional casinos,” Mark Bryan, an analyst at Bank of America Corp.’s Merrill Lynch unit, wrote in a Feb. 11 note to clients.
Crown shares rose 1.7 percent to A$11.75 at the close of trade in Sydney. The stock has gained 42 percent over the past year, compared with a 17 percent advance in the benchmark S&P/ASX 200 Index.
Packer’s proposed Sydney casino wouldn’t be completed until 2018, just before Echo’s exclusive license expires, Larry Gandler, a Melbourne-based analyst for Credit Suisse AG, said in an Aug. 13 note to clients.
Crown’s licenses to run 4,500 slot machines and 720 gaming tables at its casinos in the Australian cities of Melbourne and Perth have made it the country’s largest consumer discretionary stock by market value. It also owns about 34 percent of Melco Crown Entertainment Ltd. (6883), owner of Macau’s City of Dreams casino, and 10 percent of Echo.
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