SYDNEY (Reuters) - Australian casino operator Crown Resorts Ltd CWN.AX said on Wednesday a slump in gambling turnover from Chinese high rollers dragged down half-yearly profit, and that travel restrictions associated with the coronavirus would hurt its business.
The result shows the effects of myriad challenges on a company that has sought to reinvent itself as a relatively simple domestic business after a mass arrest in China in 2016 prompted it to tear up its global expansion plans.
“Normalised” net profit, which removes variance in win rates, fell 11% to A$172.7 million ($115.62 million) for the six months ending Dec. 31, the company said, as turnover from high rollers on gambling trips, known as “VIPs” and largely Chinese, tumbled more than a third.
The company was “impacted by continued soft market conditions and exacerbated by the recent negative publicity,” new Chief Executive Ken Barton said on an analyst call.
Crown, which is 37% owned by billionaire James Packer, was rocked late last year by media reports linking it to money-laundering, local gambling law breaches and Chinese tour operators with connections to organized crime.
The reports, which Crown took out full-page newspaper advertisements to deny at the time, prompted several regulatory probes in Australia. The company has since installed a new CEO, Barton, and a new chairman.
Crown said on Wednesday it was now experiencing a new challenge: travel restrictions intended to slow the spread of the coronavirus epidemic originating in China and “community uncertainty” were keeping gamblers away from its tables.
“People would be cautious about going into crowded places at the moment,” Barton said on the call.
A quiet period for its gambling tables adds to Crown's woes stemming from the coronavirus. This month, Hong Kong's Melco Resorts & Entertainment Ltd MLCO.O scrapped a plan to buy a 9.99% stake in the company from Packer, citing temporary casino closures and a plunge in travelers in its home market.
Crown shares were down 1% by mid-session on Wednesday, and are down 3% so far this year.
“Crown’s first-half 2020 results highlight a weak operating performance,” said credit-ratings firm Moody’s in a client note.
“We expect the coronavirus will have a moderate impact on full-year 2020 earnings, with the company having reported softer trading conditions following the travel restrictions as well as general uncertainty around the virus,” Moody’s said.
Crown declared an interim dividend of 30 Australian cents per share, unchanged from the same period a year earlier.
Reporting by Byron Kaye in Sydney and Arundhati Dutta and Niyati Shetty in Bengaluru; Editing by Shailesh Kuber and Christopher Cushing
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