ASX-listed casino giant Crown Resorts has seen revenue drop by 26 per cent across its Australian operations compounded by a big drop in its VIP business due to Covid-19 shutdowns.
Crown Resorts posted a net profit of $79.5 million for the 12 months ending 30 June, an 80.2 per cent drop on its previous year’s results.
Revenue at its casinos and hotels in Melbourne and Perth fell to $2.2 billion for the 12 months to June 30, with net profit down 80.2 per cent to $79.5 million.
Crown’s flagship Melbourne casino has remained closed since March as a result of the pandemic, but its Perth property reopened in late June under restricted operating conditions.
New chief executive Ken Barton, who replaced executive chairman John Alexander in January, said that initial trading in Perth had been encouraging, “albeit for a relatively short period of time”.
“Unfortunately, Victoria remains in stage four restrictions and, as a result, Crown Melbourne remains closed.”
Barton conceded that softer trading conditions could continue, with significant downside risk remaining as the severity and duration of the pandemic are still uncertain.
“Given this backdrop, Crown has been focused on liquidity management to ensure it is well placed to withstand this extended period of closure,” Barton said.
Crown had entered the pandemic with about $500 million in cash but moved to secure $1 billion in new debt facilities in April, supported by ANZ, Commonwealth Bank, NAB and Japanese bank SMBC.
Crown has put the extra liquidity to use with a burn at peak lockdown understood to be ranging between $20 million and $30 million per month.
Crown disclosed it had received $111 million in JobKeeper subsidies through to June 30 after standing down approximately 95 per cent—or more than 11,500—of its employees.
Through the scheme, the casino operator recorded $43.4 million in payroll subsidies, which had allowed it to maintain “operational readiness” and reopen its doors as soon as non-essential business closures and travel restrictions eased.
The pandemic has also seen Crown’s VIP players, particularly from Asia, dwindle, given the timing of the outbreak at the start of the Chinese New Year period.
Crown saw revenue from its main gaming floors fall by 27 per cent to $1.2 billion, while total turnover on its high-roller tables—which rely heavily on international VIP players—slid 46 per cent to $20 billion.
Following Crown’s Perth reopening, gaming revenue between 1 July and 16 August was up 18 per cent on the previous corresponding period.
Overall hotel occupancy across Crown’s three Melbourne hotels remained high at approximately 80 per cent, and 66 per cent across its three Perth hotels, after being repurposed to accommodate international travellers for two-week quarantine stays.
Around 1,300 workers are on site, with about 2,000 to be employed once the casino is fully operational.
“Crown Resorts’ results were credit negative, driven by weakness in the gaming sector amid the coronavirus outbreak,” Moody’s Investors Service analyst Maadhavi Barber said.
“Nevertheless, Crown’s credit profile remains supported by strong liquidity from cost reduction initiatives and additional new liquidity lines, as well as low leverage metrics.”
In light of Crown’s earnings drying up, the hotel and gaming giant suspended its policy of paying shareholders a 30-cent dividend per share every six months, with no payout announced for the June half.
Under its dividend policy, Crown traditionally pays a full-year dividend of 60 cents, split evenly between the half and full year.