August 20, 2019 / 11:38 PM / a month ago

UPDATE 2-Australia's Crown Resorts sees profit dip on China gambling lull

(Recasts with chairman’s comments, share price, analyst)

By Byron Kaye

SYDNEY, Aug 21 (Reuters) - Australian casino giant Crown Resorts Ltd said on Wednesday its annual profit fell on less gambling by Chinese tourists, and it again denied media reports alleging the company flouted visa rules that have triggered three regulatory probes.

Crown is battling multiple headaches stemming from the world’s biggest source of tourists. A spending slowdown in China has slashed turnover, while the allegations of inappropriate visa practices have brought regulatory scrutiny.

The company’s normalised net profit, which removes variance in win rates, fell 4.7% to A$368.6 million ($249.7 million) in the year to end-June, just below the A$369.8 million average forecast of analysts polled by Refinitiv.

“VIP” sales, largely made up of Chinese tourists on package holidays, fell 26.1%, the company said.

The company founded and part-owned by billionaire James Packer said it was working with authorities after media reported last month that Crown hired travel agents with ties to drug traffickers to bring Chinese gamblers to Australia.

The reports also said Crown knowingly allowed gamblers to launder money at its casinos and pressured immigration officials to fast-track visas for high rollers.

Crown has denied the allegations, which triggered a probe by the gambling authority in the company’s home state of Victoria and neighbouring New South Wales state, where Crown is building a new complex on the Sydney waterfront.

Australia’s law enforcement anti-corruption watchdog is also investigating the allegations.

“It comes as no surprise that various regulators and other agencies have launched inquiries given recent media reports and the sensationalist nature of the allegations raised,” Crown Executive Chairman John Alexander said in a statement.

“Crown has zero tolerance for criminal elements and we view these inquiries as an opportunity to continue our cooperation with regulators and other agencies,” he added.

Chinese high-rollers have scaled back their spending, reflecting the far-reaching effects of a trade war between the United States and China, which has slowed growth in the world’s second largest economy.

“Visitation has been good but average spend has been in decline,” Alexander said on a call with analysts.

Crown shares were trading half a percentage point higher by midsession, compared to a 1% dip in the broader market, as investors hoped that the company’s domestic revenue would act as a buffer against volatile package holiday spending.

Non-VIP gambling revenue at its main casino in the city of Melbourne rose 1.5% to $1.2 billion, including a 2.8% rise in poker machine revenue.

“Crown’s main floor gaming and nongaming revenue has demonstrated resilience, mitigating volatility within its VIP business,” said ratings agency S&P Global Ratings Australia Pty Ltd.

Crown maintained its final dividend at 30 Australian cents per share. ($1 = 1.4760 Australian dollars) (Reporting by Byron Kaye in SYDNEY and Niyati Shetty and Aditya Soni in BENGALURU; Editing by Darren Schuettler)

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