Echo Entertainment’s full year profit has grown by 27 per cent and it expects its performance to continue to rise.
Echo Entertainment’s earnings have beaten expectations, and with more competition coming to the table the casino operator is splashing more cash on high rollers.
The owner of The Star in Sydney lifted its full year net profit 27 per cent to $106.3 million, largely on strong revenue growth in the second half of the financial year and tight cost controls.
When volatility associated with fluctuations in spending by high rollers is removed, Echo’s profit rose 25 per cent to $158.2 million, surpassing earlier forecasts of between $150 million and $153 million.
Chief executive Matt Bekier said Echo has started the 2014/15 year with the same strong momentum.
“To me, the second half is the new normal,” he said.
“We’re not giving an earnings prediction but in terms of the initiatives and the momentum, there’s no reason why that number should go backwards.”
The Star enjoyed a 6.8 per cent rise in gross revenues to $1.3 billion in 2013/14.
Revenues from its high roller business grew by nearly seven per cent to $472 million, and The Star’s private gaming rooms achieved stronger growth as Echo’s loyalty program, launched about 15 months ago, gained traction.
Mr Bekier plans to grow the loyalty program ahead of the proposed 2019 opening of a Sydney’s second casino, a high roller venue to be operated by James Packer’s Crown Resorts, at the Barangaroo development.
“The biggest individual expense would be the expansion and the upgrade of our private facilities in advance of Barangaroo opening,” Mr Bekier said.
“Firing up our people, improving our customer service and building equity into our loyalty system that we can leverage is going to be the key for us to compete effectively.”
Revenue at Echo’s Queensland casinos, which include Jupiters on the Gold Coast, fell 3.7 per cent to $620.1 million.
Revenue from domestic gaming in Queensland was flat, while non-gaming revenue fell 5.3 per cent because of a lack of new attractions for customers.
Even so, the Echo’s performance ticked all the boxes, CMC Markets chief market analyst Ric Spooner said.
“The outlook is good and they’re ahead of their cost cutting which has really encouraged investors,” he said.
Echo’s shares were up 12.5 cents, or 3.9 per cent, at $3.325 at 1450 AEST, while the wider market was lower.
PROFIT JACKPOT FOR CASINO OWNER ECHO ENTERTAINMENT
* Full year net profit of $106.3m, up 27 pct from $83.5m in 2012/13
* Revenue of $1.81b, up four pct from $1.74b
* Final dividend of four cents per share, up from two cents