Echo reports H1 net profit of $70.2m

Reported by AAP
Friday, February 24, 2012
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Echo Entertainment Group hopes to boost the number of high-rolling gamblers visiting its Queensland casinos, after its Sydney casino, The Star, generated a big lift in its VIP business.

Echo said on Friday that it is attracting more high-rolling VIP gamblers to The Star as an $870 million expansion of the Sydney casino reaches 85 per cent completion, on time and within budget.

The company announced in December 2010 that it would spend $625 million on redeveloping its Queensland casinos.

Echo operates The Star, the Jupiters casino on the Gold Coast, the Treasury casino in Brisbane, and Jupiters at Townsville.

Echo on Friday booked a net profit of $70.2 million for the six months to the end of December 2011.

There is no comparative profit figure for the prior corresponding period because at that time Echo was part of gambling group Tabcorp Holdings.

Echo demerged from Tabcorp in June 2011.

Echo chief financial officer Matt Bekier said that in the first half, VIP business in Queensland had also grown, but from a much smaller base.

"The VIP opportunities here now are real. We're capturing a big chunk of that. We think we can do more with that in Queensland," Mr Bekier said in a market briefing.

"You've seen the numbers in Queensland already pick up as we start to use our (corporate) jets domestically, fly people (VIP gamblers) up to the Gold Coast - there's a lot more we can do on that front."

On outlook, Echo chief executive Larry Mullin said that in the first few weeks of the second half of the financial year, Echo's revenue had continued to grow, but the consumer environment was cautious.

He said that in the second half, Echo would reap more benefits from its investments in The Star over the last two years.

The redevelopment of The Star is particularly aimed at attracting more VIP gamblers.

Mr Mullin said the opening phase of the redeveloped Sydney casino would continue in the second half, with the launch of a world-class nightclub and extra VIP gaming salons and suites.

"We expect to see sustained revenue growth at The Star in the second half of the 2012 financial year, driven by the new product and expansions," Mr Mullin said.

"Operating margins will remain below optimal levels as the business completes its launch phase."

Echo said its first half result had benefited from a VIP business that had expanded significantly and experienced win rates above historical levels.

This was partially offset by higher initial operating expenses associated with the opening phase of The Star and higher depreciation and amortisation as a result of the capital expenditure undertaken to redevelop the Sydney casino.

Mr Mullin said revenue growth at The Star had been "terrific", especially in the VIP business.

He said the new main gaming floor, the restaurants, retail precinct and hotel were now fully open.

An entertainment centre would open in about a year.

The first-half performance of Echo's Queensland casinos was relatively steady in a tough consumer environment.

"While the environment is likely to remain tough into the second half, growth should improve as we track a softer comparable period impacted by the floods," Mr Mullin said.

24/04/2014 14:12Sydney, Australia. 24 April,2014
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