August 23, 2018 / 10:32 PM / in 8 months

Australia's Star Entertainment misses estimate as annual profit slumps

(Reuters) - Australian casino operator Star Entertainment Group Ltd (SGR.AX) said on Friday its annual net profit nearly halved, far below analysts’ forecasts, hurt by low house win rates.

Its reported annual net profit of A$148 million ($108.3 million) for the year ended June 30, compared with A$264.4 million the previous year, was well below the consensus estimate of A$208.2 million compiled by Thomson Reuters I/B/E/S.

Australia’s No. 2 casino operator saw its win rate slip to 1.16 percent growth, from 1.59 percent the previous year, while also soaking in higher operating costs due to domestic and international VIP rebate volume growth.

The company, which owns and operates casinos in Sydney, Brisbane and on the Gold Coast, saw its international VIP rebate business regain lost ground after it sought to reduce its dependence on big-spending customers from China which saw a sharp decline a few years ago.

Its international rebate business relates to the company’s high-roller business where foreign gamblers receive incentives such as hospitality and cash rebates in return for agreeing to gamble minimum amounts. Normalised revenue jumped 51.8 percent.

Moreover, its underlying gross revenue jumped 15.3 percent, supported by growth in both Sydney and Queensland operations.

Looking ahead, the company plans to spend A$300 million to A$350 million in 2019 financial year, down from A$477 million in spends over the current year.

Meanwhile, Star, which operates Sydney’s only licensed casino, is awaiting approval for a A$500 million redevelopment plan for part of its Sydney project, the Star.

Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Lisa Shumaker

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