Echo Entertainment reported a 5% dip in net profit in the six months ended 31st December.
Higher tax relative to the first half of 2011 combined with depreciation of the company’s extensive investment in redeveloping its flagship Star casino in Sydney drove profit from A$70.2 million to $66.5 million year on year.
Softness in the Queensland market, where publicly traded Echo (ASX: EGP) operates three casinos, also weighed on results. Revenues were down 17% in what Chairman John O’Neill termed a “tough consumer environment”.
Echo declared an interim dividend of 4 cents per share, in line with H1 2011.
“The Queensland properties continued to experience soft revenue trends driven by general macro-economic conditions in our core markets,” said Chief Executive John Redmond, who added that the company is focusing on cutting costs and is talking to the Queensland government about possibly relocating its Treasury Casino in Brisbane.
As for Sydney, the future of the market remains a question mark, the group acknowledged, as rival Crown Limited continues to angle for a presence there. Echo operates The Star under a long-term license with exclusivity through 2019, but Crown, which owns casinos in Melbourne and Perth, is lobbying for approval of a competing gaming resort on Darling Harbor.
Takeover speculation also continues to swirl about the company, with Crown seeking approval from New South Wales authorities to increase its 10% stake in Echo to 25%.
“Obviously, there is no way to predict the future,” Mr Redmond said. “So, to try to have any clarity on those issues is impossible. But, clearly, it stands to reason, as we have mentioned a couple of times in the past, there should be one licence in the Sydney market. And our licence has another 80 years to go, so whatever the plans are, they involve us, and beyond that we have no clarity.”
