Australia’s Echo Entertainment reported net profit after tax of A$106.3 million in the half-year ended 30th June, a 27.3% increase over the same period in 2013.
New CEO Matt Bekier attributed the improvement to stronger high-end play and increased domestic visitation.
Normalized for fluctuations in VIP hold, profit totaled $158.2 million, beating the company’s earlier guidance by $5 million-$8 million. Combined revenues from the Sydney flagship, The Star, and the three Queensland casinos beat a consensus of analysts polled by Bloomberg to total $1.97 billion on a normalized basis, an increase year on year of 3.8%.
Citi analyst Michael Goltsman told the Sydney Morning Herald it was “hard to fault the result”.
The beat of guidance “reflected very strong cost discipline and revealed very strong underlying momentum in gaming revenues,” he said.
Mr Bekier said Echo suffered in the past from underinvestment in The Star and poorly targeted marketing, but said, “The second half is a good proxy for what this business does now.”
Investors were enthused and pushed the stock (ASX: EGP) up 3.1% to $3.30 in trading yesterday.
Mr Bekier said the company will continue to invest about $100 million a year in The Star, while a $300 million refurbishment of its Jupiters Gold Coast in Queensland is progressing and will be complete by 2017.
Echo has sold its Jupiters Townsville in the north of the state for $70 million to concentrate on Gold Coast, which could host a competing super-resort in the years ahead, and the competition with rival Crown Resorts for a new destination resort the state is offering in Brisbane, where Echo operates the city’s sole casino. Echo is partnering with Hong Kong property giants Far East Consortium and Chow Tai Fook on its bid. Crown is allied with Chinese state-owned developer Greenland.
