Crown in the red as pandemic hammers earnings for second year running

Crown in the red as pandemic hammers earnings for second year running

Pandemic restrictions on Crown Resorts' (ASX: CWN) gaming and accommodation operations are likely to result in a statutory loss for the company as earnings dwindle for the second year in a row.

In a trading update issued today, the casino giant says its FY21 results were "significantly impacted" by the COVID-19 pandemic, with properties closed and operating restrictions in place for large chunks of the period.

As such, CWN expects to record a statutory loss after tax for the full year and theoretical EBITDA of between $90-100 million after taking into account closure costs.

Excluding closure costs EBITDA would have been between $240-250 million, meaning government restrictions saw the gambling and resort company lose around $150 million in earnings due to the pandemic.

This compares to the group's FY20 closure costs of $81.6 million, and earnings during that period of $504.6 million, most of which was generated pre-pandemic.

It is also a major departure from the company's FY20 profit after tax of $79.5 million, which was a huge hit at the time - down 80.2 per cent on the 2019 financial year.

The company expects to report net debt at 30 June 2021 of approximately $900 million.

The trading update comes as the company is in the midst of a takeover tussle, with Oaktree Capital Management and The Star Entertainment Group (ASX: SGR) both making their own proposals to buy part or all of the company.

Oaktree's bid is worth $3.1 billion, and if accepted would see the company buy-back shares held by James Packer's Consolidated Press Holdings.

Meanwhile, The Star Entertainment Group is attempting to buy all of Crown for $12 billion - a bid worth $4 billion more than CWN's current market capitalisation.

The bids come as Crown is under the microscope of two Royal Commissions in Victoria and Western Australia which will determine whether the company is suitable to hold a casino licence.

Earlier in the year the NSW regulator deemed CWN unsuitable to hold a casino licence for its $2.2 billion Barangaroo tower in Sydney, in line with advice from the scathing Bergin Report.

 

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