Australian casino group Star Entertainment saw profit from its VIP segment slide by 35 per cent over the year to June 30 as profit fell 8.4 per cent to A$224m.
The fall came despite Star attracting more internationals than ever, up 10 per cent, offset by lower spend per head. International VIP Rebate business revenue fell 30.7 per cent.
‘Solid’ domestic growth at its casinos in Sydney, Brisbane and the Gold Coast however boosted its Australian profit by 5.4 per cent. Domestic customers accounted for 88 per cent of Star’s revenues for the year. In Sydney, overall visitation was flat with slots revenue up 3.4 per cent and table revenue up four per cent. Queensland saw its slot GGR increase by 2.9 per cent with table revenue up 3.9 per cent.
The VIP trend will be a concern though. EBIDTA from the VIP segment fell business fell to $557m with turnover from international VIPs coming in at $42.4bn, down 30.7 per cent on the previous year.
Star Chief Executive Officer Matt Bekier said: “Our earnings are solid, our balance sheets is strong and we have a very robust domestic business that will be even stronger now that we have taken decisive action on costs that will set us up well for the next year. 2020 continues to reflect a cautious consumer environment but has improved. In terms of the regulatory action, we have not really been caught in the same inquiries that others have. The ASIC [Australian Securities and Investments Commission], for example, we have not had any contact from them. The group remains focused on executing our long-standing strategy of investing to drive visitation and earnings to our network of properties in sought-after destinations.”
Star Group Chairman John O’Neill added: “Over FY19, the Group completed a further year executing its growth strategy, with major projects at Queen’s Wharf Brisbane, The Star Gold Coast and The Star Sydney proceeding to plan. Record domestic revenues and earnings, reflecting continued positive reception by existing customers to recently delivered assets, have not offset declines in our International VIP Rebate business, which was impacted by weaker market conditions.”
“Star’s results highlight how their earnings stream is quite different to the Crown model and in a tighter domestic economy, their result isn’t too bad,” said James McGlew, executive director of corporate stockbroking at Argonaut.
Mr. Bekier added: “The group remains focused on executing our long-standing strategy of investing to drive visitation and earnings to our network of properties in sought-after destinations.”
It has several projects underway in Queen’s Wharf in Brisbane and The Star in the Gold Coast with capital works remain on track, with major developments underway at.
“Around 60 per cent of total project costs for Queen’s Wharf Brisbane are now under lump sum contracts, with a further approximate 28 per cent to be contracted on lump sum terms expected by end of the financial year,” Mr. Bekier informed.