Crown in multi-billion dollar bid to redevelop Melbourne and Perth casinos

Crown reported a 15 % increase in annual net profit to us$ 352.2 million, struck on a 3 per cent increase in revenues to us$ 2.5 billion. But it remained cautious about the outlook because of soft consumer sentiment and the ongoing impact on VIP revenues from the new casinos in Singapore that opened last year. Profit growth for the group was underpinned by the Macau-based Melco Crown Entertainment joint venture, in which Crown holds a 33.4 % stake.

Crown's actual share of MPEL's bumper earnings was us$ 36.5 million for 2011, normalised to us$ 20.1 million when taking into account the win-rate on VIP program plays, compared to CWN's us$ 72.8 million share of MPEL's loss last year. Analysts were surprised at the higher than forecast turnaround in the contribution from MPEL to Crown's result.

Crown CEO Rowen Craigie said main gaming-floor revenue growth for the start of the new financial year so far was 3.8 % in the group's Australian casinos, and non-gaming revenue was up 7.4 %. This is in contrast to Echo Entertainment, owner of Sydney's Star City Casino and Jupiters Casino on the Gold Coast, which last week reported revenue growth of 8 % so far in the new year. Crown delivered us$ 184.7 million in earnings before interest, tax, depreciation and amortisation at Perth's Burswood casino in 2011, down from us$ 192.4 million a year earlier.

Craigie said Burswood's earnings would remain under pressure until the completion of the refurbishment program of the casino's VIP facilities, which is due by Christmas. "Burswood is playing in this game with one hand tied behind its back," he said.

Crown Melbourne generated EBITDA of us$ 535.9 million, down from us$ 566.9 million in the prior year. The Melbourne casino is also in the advanced stage of refurbishment, which is due to be completed by the end of the 2012 financial year.

While he declined to confirm second-half earnings would be better than for the first, Craigie did say: "The properties will be in a more complete state in the second half than in the first half."

Crown shares fell 15 cents, or 1.85 % in late afternoon trading as the benchmark S&P/ASX 200 was up nearly 1 %. The business also revealed it would buy back up to 30 million shares, or about 4 per cent of its issued equity. The buyback is expected to lift Packer's 43 % stake in Crown.

Crown continues to hold a 4.9 % stake in both Echo Entertainment and Tabcorp, which were acquired before the recent Tabcorp demerger.

Analysts said the announcement of a buyback indicated Crown had no intention to move on either company. "Crown has stated it has no intention of increasing its holding in either, and the announcement on the buyback would seem to confirm this," analysts at Citi said today. A final dividend of 19c was declared, half franked.