Crown Resorts Looking Forward to a Revenue Boost from Melco Sale

Crown ResortsFor the fiscal year 2017 ending on June 30, Australian casino operator Crown Resorts Ltd has declared a net profit of A$1.87 billion or US$1.49 billion. It has witnessed a jump of approximately 97% over the past year in spite of revenue decline.

The most important reason for the rise is the profit gained from the disposal of the stakes of the company in its Macau joint venture Melco Crown Entertainment Melco Resorts and Entertainment Ltd.

The selling contributed a considerable amount of A$ 1.75 billion to its overall profit. If it had been for this, Crown Resorts Ltd would have posted a net profit of meagre A$343.1 million, a Y-O-Y decline of 15%.

According to the company, there is a decline of 7.5% in the revenue for the group on year on year and reaching a figure of A$3.34 billion. The most important reason for the decline was because of the drop in gaming revenue, especially in the VIP sector. As compared to last year, there is approximately 50% decline in VIP gaming revenue; falling from a figure of A$1 billion in 2016 to about A$605 million now.

John Alexander who is the Executive Chairman of Crown Resorts made the following statement:

Crown’s Australian operations’ full-year result reflected difficult trading conditions. Total normalized revenue across Crown’s Australian resorts declined by 12.7 percent.

The gaming operations of Crown Resorts took a significant hit after its 19 employees including Jason O’Connor who is the head of international gaming were arrested last year by Chinese authorities for crimes related to gambling in Mainland China.

Subsequently, the gaming property of the company in Melbourne witnessed a drop of 47% while there was a 39% drop in Perth property. 16 of the detained employees were given prison time last month apart from fines that amount to $1.67 million which was borne by Crown Resorts. The company later overhauled its strategy by withdrawing from all its international ventures.

A report from Reuters noted that when inquired about the link between the drop in revenue and action of the Chinese government, John Alexander said that he would not make any further comments on China. He further noted that the company is waiting for the release of O’Connor after which they would be reviewing the business model for VIP segment. It is expected that Connor would be released by next month.

Crown Resorts in its latest financial records has confirmed its decision for withdrawing from Alon casino and hotel project in Las Vegas by registering a loss impairment about investments already done.

The company has declared that a dividend worth A$0.300 per share would be paid to the shareholders on October 6 this year as compared to the profit of A$0.395 per share in 2016. The Crown Resorts has announced that they would buy back additionally 29.3 million shares following up initial share buyback of an amount of A$ 500 million in June this year.

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