Crown profits take a hammering from closed casinos

With its casinos closed in line with COVID-19 restrictions for a chunk of the last financial year, Crown Resorts (ASX: CWN) witnessed an 80.2 per cent dive in profits after tax down to $79.5 million.

The group was forced to close all of its gaming facilities as well as a significant part of non-gaming operations at Crown Perth and Melbourne - the latter is still not operational because of the city's Stage 4 lockdown.

As such, Crown stood down 95 per cent of its workforce and take up the Federal Government's JobKeeper program, receiving $111.3 million in wage subsidies through to 30 June. Crown has announced today it will not declare a final dividend for the full financial year.

Closure costs added up to $81.6 million for the financial year, and the company recorded impairments worth around $75 million relating to its operations in London and restaurant chain Nobu.

CEO and managing director Ken Barton describes the year as "extremely challenging".

"Given this backdrop, Crown has been focussed on liquidity management to ensure it is well placed to withstand this extended period of closure," says Barton.

"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."

Crown's earnings also suffered because of the COVID-19 pandemic, down 40.6 per cent to $504.6 million, as did its resort revenue streams which were down 25.7 per cent to $2.2 billion.

Naturally, with international travel off the cards, the company witnessed occupancy at its Melbourne hotels of 82 per cent and at its Perth hotels of 66 per cent on average, with both its Melbourne and Perth hotels used as quarantine facilities.

Without a physical place to gamble, punters tried their luck with Crown's digital wagering businesses Betfair and DGN Games.

EBITDA from the digital gaming operations was $34.7 million, up 32 per cent year-on-year.

At 30 June Crown's net debt position was $891.5 million, with the company securing an agreement from its lenders for a waiver of banking covenants due to the ongoing closure of Crown Melbourne.

Crown says it has been encouraged by initial trading performances from its recently reopened casino in Perth, especially given the operating restrictions which remain in place like physical distancing requirements and limited product availability.

For the period from 1 July to 16 August Crown Perth's main floor gaming revenue was up approximately 18 per cent on the pcp, but non-gaming revenue was down 24 per cent.

Based on current trading levels, Crown Perth is not expected to qualify for the JobKeeper program beyond 27 September.

Shares in Crown are up 2.85 per cent to $9.76 per share at 1:48pm AEST.

Updated at 2:26pm AEST on 19 August.