Trans-Tasman casino owner SkyCity Entertainment expects a further drop in earnings from its Darwin casino as poker machine players opt for rival pubs and clubs.
The company has reported a 69 per cent fall in net profit for the 2016/17 financial year to $NZ44.9 million ($A41.7 million), due to a previously flagged $A95 million writedown on the value of SkyCity Darwin.
The writedown is the result of a 75 per cent increase in the number of poker machines in Darwin outside of the casino since a cap on gaming machines in the Northern Territory was removed in 2015, hurting the casino's revenue and earnings.
SkyCity Darwin's gaming revenue fell 5.6 per cent from the prior year, and its earnings dropped 20 per cent.
The company expects SkyCity Darwin's performance to be slightly weaker in the current financial year due to the competition from local pubs and clubs and a challenging local economy.
SkyCity, which also owns casinos in Adelaide, Auckland, Hamilton and Queenstown, is looking at options to maximise the property value of its Darwin casino, such as developing land next to the casino.
Chief executive Graeme Stephens says the tougher competitive environment in Darwin isn't going to change, but the company has no plans to sell and sees value in holding a gaming licence that enables it to cater for both mass market and high-rolling international gamblers.
"I don't think it would be the right time to sell it," Mr Stephens told AAP.
Gaming revenue and earnings were also weaker in Adelaide in 2016/17, due to fewer visitors and the disruption caused by redevelopment works in the surrounding Riverbank precinct.
The Adelaide casino is expected to return to modest earnings growth in 2017/18.
SkyCity's three New Zealand casinos generated revenue and earnings growth, and the company has forecast modest overall earnings growth in 2017/18.
Its international high-roller business suffered a 30 per cent drop in turnover in 2016/17, hit by increased restrictions on funds transfers, and fewer visits by VIP gamblers following the arrests of Crown Resorts employees in China.
SkyCity shares were down 13 cents at $3.66 at 1455 AEST.
DARWIN CASINO WRITEDOWN HITS SKYCITY
* Full year net profit down 69.2pct to $NZ44.9m ($A41.7m)
* Revenue down 7.2pct to $NZ1.02b ($A948m)
* Final dividend down 0.5 cents to 10 NZ cents
