Echo Slumps to Record as CEO Quits, Net Income DeclinesDavid Fickling
Echo Entertainment Group Ltd. slumped to a record after saying Chief Executive Officer John Redmond will step down and earnings plunged 31 percent in the fiscal first half on a decline in VIP gambling revenue.
The casino operator fell 6 percent as of the close in Sydney to A$2.18, the lowest since Echo was spun out of Tabcorp Holdings Ltd. in 2011. Redmond, who started in the role Jan. 18 last year, will leave the company May 1 and be replaced by Chief Financial Officer Matt Bekier, the CEO said on a conference call.
Echo will face competition from billionaire James Packer’s Crown Resorts Ltd. in Sydney, where its Star casino is losing its monopoly, and from new entrants in Queensland state where it has the only casinos in Brisbane and the Gold Coast. Sales to high-rolling VIP gamblers at the Star fell 17 percent in the six months ended December from a year earlier as Echo trimmed customer discounts.
“There’s so much uncertainty surrounding the stock,” Killian Murphy, an analyst at CIMB Group Holdings Bhd. in Sydney, said by phone. “There’s no overarching reason to hold it at the moment.”
Net income in the six months ended December was A$46 million ($41 million) as the company lost money on interest rate derivatives and won fewer-than-expected bets against high-rolling VIP gamblers. That missed the A$56 million median estimate of four analysts surveyed by Bloomberg News.
Redmond, a former chief executive of MGM Grand Resorts had promised to bring his expertise in managing large, Las Vegas-style casino resorts to help Echo capitalize on Asian gamblers and tourists.
He “helped us at a particularly difficult time,” Chairman John O’Neill said in a conference call. “He provided leadership, he provided stability,” and was returning to his home in the U.S. for personal reasons, O’Neill said.
The reason for his departure “is not an area I’m going to elaborate on,” Redmond told a news media conference call after the results.
Bekier, who has been Echo’s chief financial officer since its 2011 listing, will take on the chief executive role after a three-month transition, according to the statement.
There was “soft underlying consumer sentiment” during the first half of the year, O’Neill said in the statement, driving sales to domestic visitors and gamblers down about 3.5 percent from a year earlier.
Echo last month announced plans to sell its Townsville casino for A$70 million and said today it was seeking development approvals to spend A$345 million expanding and refreshing its casino in the Gold Coast south of Brisbane.