Coronavirus has, for the time being, driven the destruction of profits at the country’s gambling giants, as reports from Tabcorp and Crown resorts confirmed.
Tabcorp revealed an $870 million net loss after writing down its wagering, media, and gaming services business by $1.09 billion. Tabcorp earned a net profit of $361 million for 2019-20.
The company revealed intended write-downs and weak trading returns in an August 3 statement to the ASX.
News of the write-downs and the weak trading sparked speculation of a capital raising, which was confirmed by market sources earlier this week and announced yesterday.
Tabcorp was set to release its full-year results yesterday, but instead requested a trading halt and announced a $600 million equity raising plan.
Revenues fell 4.8% to $5.2 billion in the year to June 30. Earnings before interest and tax before significant items 9the huge impairments) fell 23.2% to $596 million. And net profit after tax dropped 31.6% to $271 million.
Tabcorp managing director and CEO David Attenborough said COVID-19 had been “very challenging” and “materially impacted our FY20 results”.
“COVID-19 restrictions meant that hotels, clubs, and TAB agencies were closed for significant periods of time during FY20. This has heavily impacted our Wagering & Media, Gaming Services, and Keno operations. We continue to support our venue partners and have waived more than $100 million in fees to date,” he said.
“We are focused on ensuring that together we emerge strongly in the post-COVID-19 environment.
“We also recognise that this has been a difficult year for shareholders, with no final dividend as previously announced. We have taken action to reduce costs, preserve cash, and ensure we have strength and flexibility in our balance sheet.
“We have also commenced a three-year, enterprise-wide optimisation program designed to deliver significant cost savings and enhanced operational capability.”
So more pain ahead for staff, shareholders, and punters.
While there’s no final dividend, shareholders were paid an interim of 11 cents a share.
Unless there is a quick return to normality over the next few months, the chances of an interim for 2020-212 look slim.
Meanwhile, the James Packer dominated Crown Resorts also saw its performance whacked lower by the pandemic and subsequent lockdowns and travel restrictions.
The company’s net profits after tax dropped by 80% to just $79.5 million after the coronavirus forced the closure of Australian casinos.
That was off the back of a 25% slump in revenues from its casinos and hotels in Melbourne and Perth to $2.2 billion for the 12 months to June 30.
CEO Ken Barton said in Wednesday’s release to the ASX that Crown’s suffering began as early as January (when Chinese gamblers were stopped coming by lockdowns and travel halts).
The impact worsened after its casinos were shut down in Perth and Melbourne, with 95% of employees stood down.
“As a result of the impact on Crown’s businesses, Crown qualified for the Commonwealth Government’s JobKeeper program, which has helped support thousands of our employees,” Mr. Barton said.
“In addition, Crown has established a Hardship Fund to provide additional, targeted financial assistance to employees experiencing serious financial hardship as a result of COVID-19.
“This program is in addition to the many other programs Crown has established to support employees during this unprecedented time.”
Excluding the cost of the COVID-19 shutdown and significant items, and applying a “theoretical” long-term win rate on turnover to even out lucky or unlucky streaks on the gaming table, Crown’s earnings were weak, slumping 56% to $161 million.
Crown reported a $53 million impairment against its London casino Crown Aspinalls and a $22 million impairment against the Nobu restaurant chain it co-owns with US actor Robert De Niro.
That saw the company scrap its final dividend of 30 cents a share. An interim of 30 cents was paid earlier in the year.
Crown has a policy of paying total dividends of 60 cents a share, subject to its financial position. Mr. Barton claimed the news was brighter when it came to Crown Sydney.
“Despite the challenges of COVID-19, the construction of Crown Sydney has continued throughout this period and it’s a credit to our team that it remains on track for its scheduled December opening,” he said.
The shares rose 3% to $9.80.
