Tabcorp says 2010 remains uncertain but looks to expand Gold Coast casino

Tabcorp reported a net profit of us$ 257.9 million for the six months to December 31, down from us$ 263.2 million in the prior corresponding period. Normalised net profit, which takes into account variations in the win rate against high-rolling gamblers, was up 0.8 % to us$ 264 million.

"We expect conditions to remain somewhat uncertain for the remainder of the 2010 financial year as government stimulus measures are wound down and higher interest rates affect discretionary income," Tabcorp chief executive Elmer Funke Kupper said.

Tabcorp was also waiting for the Victorian government to award the post-2012 Victorian wagering licence. "These events will allow us to chart the future direction of the company with greater clarity," Funke Kupper said. He said Tabcorp saw significant expansion opportunities in casinos, which was evidenced by the group's current us$ 575 million redevelopment of the Star City casino in Sydney.

"We really would like to do more in Queensland as well over the coming years, because we believe particularly the Gold Coast will benefit from expansion investments," Funke Kupper said. In Queensland, the firm operates the Conrad Jupiters casino on the Gold Coast, Conrad Treasury in Brisbane and Jupiters Townsville.

"The upside at the Gold Coast, we think, is substantial. It's very strong growth area, it's a very large market. We've got a good position, but the property needs that expansion and work," Funke Kupper said, and pointed that Tabcorp had produced a sound first half result in a very tough economic, competitive and regulatory environment.

Gaming markets in Queensland and Victoria had contracted for the first time in years and competition in wagering continued to be very intense. However, Tabcorp's wagering division and the Star City casino in Sydney had performed well.

Tabcorp's casino operations in Queensland experienced soft trading because the Queensland economy had weakened. Higher gaming taxes in Queensland casinos and new race field charges in wagering wiped off us$ 13 million from Tabcorp's first half results.

For Tabcorp's casinos division, normalised earnings before interest and tax (EBIT) fell 10.9 % to us$ 147.8 million. "Casinos is really a story of two states: strong revenue performance and strong earnings performance in NSW ... offset by Queensland," Funke Kupper said. He added said that Tabcorp would focus on gaining market share and investing in its properties because growth in the Queensland market would return in the long term.