An improved performance from The Star casino in Sydney has helped Echo Entertainment Group more than double its first half profit.
Echo said on Wednesday that a strong performance from its domestic business, strong growth in its international high-roller business and solid control over costs had contributed to a 110.6 per cent lift in reported net profit.
Echo operates The Star casino in Sydney, the Treasury casino in Brisbane and the Gold Coast's Jupiters casino.
Echo made a net profit of $97.1 million for the six months to December 31, up from $46.1 million a year ago as revenue lifted 25 per cent to $1.09 billion.
Normalised earnings before interest, tax, depreciation and amortisation was up 31.5 per cent to $261.4 million, which was slightly ahead of the company's guidance in October of $245 million to $260 million.
"The performance of The Star is predominantly responsible for the improvement in the group's earnings, with the $870 million refurbishment of the property that was completed at the end of 2011 now delivering on the board's and management's expectations," Echo said.
The Star lifted its revenue by 38.8 per cent compared to a year ago.
"The Star has had very good numbers," Echo chief executive Matt Bekier said.
The Star's performance was driven by reduced costs, expanded facilities, a diverse product offering, marketing initiatives and the casino's loyalty program.
Mr Bekier said that with James Packer's Crown Resorts set to enter the Sydney gaming market from November 2019, it was important that Echo develops a strong customer base through its loyalty program and offer higher quality private gaming rooms for loyalty club members.
Echo is planning to spend another $500 million over five years for further expansion and upgrades of The Star.
Echo also did better in attracting high-rolling international gamblers in the first half, with revenue from that business lifting 96.7 per cent to $332.2 million.
The lift in the international high-roller business was driven by an increase in the number of junkets, where a person or group is introduced to a casino by a junket promoter who receives a commission from the casino operator.
The junket business was mainly from North Asia - largely Chine, Hong Kong, and Macau - but there had also been a significant increase in gamblers from Thailand.
But Mr Bekier said competition for VIP gamblers was getting pretty aggressive, and it was hard to read the market.
"From a strategic point of view, our focus is very strongly on the domestic business. The VIP business is great - love to have as much of it as we possibly can - but in terms of predicability, repeatability and risk, the domestic business is really where our focus is," he said.
Echo shares were seven cents lower at $4.16 at 1419 AEDT.
IG market strategist Evan Lucas said Echo had achieved its market guidance given in October but the market had been expecting more.
ECHO PROFIT LIFTS AS THE STAR SHINES
* Half-year revenue of $1.09b, up 25.3pct from $867.8m.
* Half-year net profit of $97.1m, up 110.6pct from $46.1m.
* Fully-franked interim dividend of five cents per share, up from four cents.
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