Supplier News

Australia – Echo CEO resigns following 30 per cent profit slump

By Phil - 7 February 2014

Echo Entertainment’s Chief Executive has resigned after just one year in the job, following an alarming dip in profit due bigger than expected wins by high-end punters.

Echo Entertainment Group CEO John Redmond announced his retirement from the Australian operator as it reported that net profit had dropped by 30.5 per cent to A$46.1m, due to ‘higher-than-expected win rates’ from VIP customers. Whilst gross revenue dropped 7.3 per cent to $901m, normalised revenue, which disregards volatility caused by high rollers, dropped 4.8 per cent in the first half of the 2013 to 14 to $929.6m, due to weak spending. Revenue from table games and poker machines dropped 7.4 and 2.8 per cent respectively.

Echo, whose shares have lost 35 per cent over the past year, said Mr. Redmond would retire from the company during 2H14 and return to the United States of America. He has begun the transition of his responsibilities to Matt Bekier who will become Managing Director and CEO, having served as CFO and an Executive Director of Echo since the company’s establishment as a separate listed entity.

Chairman John O’Neill AO said: “Over a year ago, John Redmond agreed to move from his Non-Executive Director position into the CEO role to assist in leading the company after a very difficult period. He has established solid foundations for profitable future growth. He has also delivered the first stage of Echo’s development plans for South East Queensland. As a company, we are fortunate to have had the leadership of a man of John’s calibre during this period, and we are grateful for his contribution. Over a transition period of the next three months, John will be handing over his responsibilities to Matt Bekier. Matt knows the company and the Australian market exceptionally well and has been working closely with John in re-establishing a path towards profitable growth. The Board is confident that Matt is the right person to lead the group forward on the foundations that have been built, and looks forward to the continuity that Matt’s appointment will provide.”

Matt Bekier has been a senior executive in the gaming industry since 2005 when he joined Tabcorp Holdings Limited as CFO, a position he held until the demerger of Echo in June 2011. Over that period, Matt was intricately involved in the negotiations and structuring of gaming licences, led a range of operational improvement programs and drove the project to demerge and establish Echo. He also had budgetary responsibility for the three year $870 million expansion project at The Star which was delivered to target. Prior to Tabcorp, Matt held various roles with McKinsey & Company in Australia, Asia, the US and Europe.

Managing Director and CEO, John Redmond said: “I would like to thank the Board for entrusting me with a job of great responsibility during a challenging period for Echo. I believe the company is in much better shape today, which is reflected in our profit announcement to the market. Whereas there can never be a perfect or ideal departure, I do strongly feel that a three month transition provides a good window for all involved, given how

2013 had proved a difficult year in which weak spending damaged revenues at Echo’s four casinos whilst the operator lost its monopoly grip on the Sydney casino market with the approval of James Packer’s Barangaroo project. In its most recent results Mr. Redmond had described the company start to this year as ‘encouraging’ pointing to revenue growth across all its properties in January.

The operator off loaded its Townsville casino at the end of January to allow it to focus on its properties in Brisbane and the Gold Coast.

“With the cost optimisation program largely complete, EBA [enterprise bargaining agreement] renegotiated at The Star and Treasury Brisbane and the new group loyalty program launched, Echo has the right platform to drive improvement in the operational performance of the assets, and a stronger return on investment at The Star,” Mr. Redmond said. “While the Queensland properties have experienced soft revenues in 1H14, the modernisation of the regulatory environment for electronic gaming machines will help provide revenue momentum in the second half and into next year.”