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UPDATE 2-Australia's Crown Resorts hits pause as China arrests slow turnover
February 23, 2017 / 12:50 AM / 9 months ago

UPDATE 2-Australia's Crown Resorts hits pause as China arrests slow turnover

* H1 underlying profit A$191.3 mln vs A$210.4 mln prior year

* VIP revenue A$325.2 mln vs A$530.4 mln prior year

* Hotel trust cancelled

* Special div. 83 cents, interim div. 30 cents, vs 33 cents prior (Recasts, updates chairman quote, stock rise, adds analyst quote, cancelled trust)

By Byron Kaye

SYDNEY, Feb 23 (Reuters) - Australian casino giant Crown Resorts Ltd said on Thursday it is in a “holding pattern” until it learns the fate of 18 staff detained in China, as plunging turnover from Asian high-rollers drove down underlying half-year profit 9.1 percent.

Crown offered no earnings guidance but its shares jumped 8 percent in a broadly weaker market as investors welcomed the first clarity about the financial impact of the China arrests.

“There are still difficulties but people are at least happy there were no further downgrades,” said Angus Gluskie, a portfolio manager at White Funds Management, which holds Crown shares.

The world’s biggest listed casino firm outside China has reversed a global expansion strategy since Chinese authorities arrested the sales staff, including its head of international VIP sales, for suspected “gambling crimes” in October. They are yet to be charged.

But the arrests have forced casino operators to scale down sales operations in mainland China and the future of Crown’s prized source of growth, rich Chinese “VIP” gamblers, remains uncertain.

“We’re in a different situation now ... because of what happened in China and we’re waiting to see how that plays out before we resume traditional marketing in the region,” Executive Chairman John Alexander told analysts.

“We’re in a holding pattern.”

His comments echoed those of Matt Bekier, chief executive of Crown’s smaller Australian rival Star Entertainment Group Ltd , who earlier this month said “we’re not taking any risks” in reference to marketing in China after the arrests.

In its first results statement since the arrests, Crown said turnover from VIPs in Australia fell 45.3 percent to A$19.6 billion, reflecting a global gaming industry trend since China launched a crackdown on graft and illicit money flows.

Excluding a gain from selling most of a one-third stake in Macau-based casino operator Melco Crown Entertainment Ltd , interim net profit was A$191.3 million ($147.2 million). Analyst forecasts had varied widely as the arrests took place mid-way through the half.

Investors also cheered a special dividend of 83 cents from proceeds of the Melco sell-down and a A$500 million share buyback. The company’s interim dividend of 30 cents was below the previous corresponding payout.

The stock is still 5 percent below its level before the China arrests, which forced the company to quit its Macau holdings and drop plans for a Las Vegas casino.

On Thursday it also canceled a plan to spin off a trust holding its Australian hotels, and announced that CEO Rowen Craigie would step down with Alexander assuming his responsibilities.

Craigie oversaw the global expansion which is now being unwound.

$1 = 1.2994 Australian dollars Reporting by Byron Kaye; Editing by Stephen Coates

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