Chief executive Robbie Cooke addressed investors one week behind schedule,after the casino giant was blindsided by a decision by the NSW gambling regulator to into the company’s suitability to operate.
“Competition from Crown in the Sydney market for table games had an impact on table revenue while a market share slip to pubs and clubs had an impact on electronic gaming machine revenue as did consumer discretionary spending,” Cooke said.
Star Entertainment chief executive Robbie Cooke.Louie Douvis
He also noted the business had lost market share after it stopped offering complimentary beverages to VIP casino guests over the half. This policy has since been reinstated.
The business has also implemented playing limits across its casinos which restrict customers to three hours of continuous poker machine play and six hours of table games play.
Star Sydney’s total revenue fell 17 per cent on the prior corresponding period to $450 million,while Gold Coast fell 14 per cent to $238.1 million and the Brisbane premises fell 10 per cent to $177 million.
Render of The Star Brisbane,which will anchor the Queens Wharf entertainment complex.Supplied
Cooke said major pubs in Queensland had started bolstering their offering ahead of the opening of The Star’s joint venture premises,Queens Wharf Brisbane,and had lost market share as a result.
The bulk of the group’s revenue was still generated from its three casinos despite its market share slip. Non-gaming revenue – underpinned by its three hotels and many restaurants – fell by 5.6 per cent over the half to $176.4 million.
Profit excluding significant items such as charges for regulatory and legal costs was $15.9 million,which beat analyst expectations of $13 million. This outperformance drove the group’s share price up by more than 7 per cent to 52¢. Star Entertainment shares have more than halved since this time last year following multiple regulatory and taxation hurdles,to the chagrin of investors.
The swing back to profit followed a in the previous December half,which was marred by shareholder class actions and the suspension of the company’s Sydney casino licence. Sales fell 14.6 per cent to $865.7 million in the six months to December 31,The Star said in a statement to the ASX on Thursday morning.
Earnings before interest,tax and significant items,excluding those significant charges,slumped 48 per cent to $51.4 million over the half,48 per cent lower than the prior period.
Cooke said the group has achieved milestones despite the many challenges over the past 18 months – including the approval of its remediation plan in Queensland and the resolution of the proposed doubling of its tax rate in NSW – and said the inquiry by the NSW Independent Casino Commission would be a chance for the company to demonstrate it was capable of regaining its coveted casino licence in NSW.
“Despite the challenges of the past 18 months,as a team,we are progressing and continuing to work hard to do all we can possibly can to restore our suitability and earn back trust,” Cooke said.
Barrenjoey equity analyst Matt Ryan told clients The Star’s earnings before interest,taxes,depreciation,and amortisation was 9 per cent below the investment bank’s forecast and 16 per cent below consensus expectations. Barrenjoey has an overweight rating on the stock and expects seasonally lower performance for the remainder of this financial year.
The casino operator had expected the worst of is financial turmoil to be over when it posted a whopping $4 billion loss – driven by a writedown in the value of its three casinos in Sydney,the Gold Coast and Brisbane – last year. The loss followed two damning state inquiries,four shareholder class actions,looming multimillion-dollar fines and two revoked state casino licences.
But what the NSW regulator decides to do after the 15-week second inquiry could ultimately lead to the closure of its Pyrmont casino.
last week,two years after an earlier inquiry found anti-money laundering and counter-terrorism failings. The new inquiry will again be headed by Adam Bell,SC,and will focus on the casino’s culture since it was disgraced in 2022.
Star Sydney’s licence has been suspended since 2022. The casino has been operating under special manager Nicholas Weeks,whose term has been extended three times because the regulator is not satisfied by the casino business’s remediation process.
The Pyrmont casino may be shut down entirely if Bell finds The Star has failed to meaningfully progress since his last report.
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