Crown bets on medium term - NineMSN - 28th October 2008

Crown Limited (CWN) said its operating performance in Australian casinos over the first half of 2009 had been solid. The company said despite tough conditions it was confident of its long-term prospects.

At the company's AGM, CEO Rowen Craigie said combined revenue from table games, excluding VIP commission program play, and gaming machines from 1 July to 21 October 2008 was up 4% on the prior corresponding period last year.

"Year-on-year growth in international VIP commission program play has been very strong over the same period," he said.

Mr Craigie admitted that a few customer segments were exhibiting some signs of softness, including low end gaming machines, corporate events and corporate hotel bookings.

However, he said the impact had been offset by solid growth in other customer segments such as table games, high-end slots, leisure hotel bookings and private functions.

"Following the 8.2% growth in EBITDA at Crown's Australian casinos in 2007/8, we expect solid growth in 2008/9 despite the anticipation of a more difficult trading environment and the disruption from the casino refurbishment programs," Mr Craigie said.

He added that Crown Melbourne had shown solid and consistent EBITDA growth over the past decade and had shown resilience in difficult times in the past.

"We are confident that over the medium term this pleasing growth trend will continue," Mr Craigie said.

Executive chairman James Packer said the 12 to 18 month view was challenging particularly in Las Vegas.

"While these are certainly tough times in financial markets and for the global economies generally, we mustn't forget that these are the times when if you take a medium term view on your investment decisions you can make good returns," he said.

"On a two to three year view we see ourselves as having some of the best operating assets in the industry and importantly one of the strongest balance sheets in the industry."

Mr Packer said Crown management's focus over the coming year would be on ensuring that its Australian properties continued to deliver consistent earnings growth, on managing the major capital expenditure programs at those properties and on optimising the performance of its international businesses.

Mr Packer said in Macau, Crown Macau was trading well, completing its first full year of operation.

"Melco Crown Entertainment's next development, City of Dreams, is on track to open in the first half of 2009," he said.

"We believe this will be an exciting and attractive property."

However, Mr Craigie admitted that restrictions from the Chinese government on some of its citizen's being able to obtain visas to travel to Macau had an impact in September, with year-on-year gaming revenue growth for the month declining by about 3%.

"However over the medium term, we have confidence that the Chinese and Macau governments will manage the visitor flow and the approval of new gambling product in Macau to ensure an ongoing sustainable casino and tourism industry in Macau with balanced growth rates," he said.

Meanwhile, in the US, the company said Cannery had continued to improve its operating performance in Pittsburgh with revenue in the quarter to 30 September 2008 up 14% on the same quarter last year, despite the US economic downturn.

In Las Vegas, Mr Craigie said Cannery's casinos operated in the "locals" market.

"These properties are managing to capture customer share, although they are doing so in a declining market," he said.

"While the recent decline in the Las Vegas market is disappointing, Las Vegas locals casinos have a long term growth profile which has always overcome past negative impacts like the downturn following 9/11."

At 1525 AEDT, Crown was trading down 31c at $6.17.

Credit: NineMSN)

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