REVENUE gains from both small punters and high rollers helped Echo Entertainment Group (ASX: EGP) boost its bottom line by 27.3 per cent to $106.3 million for the 2014 financial year.
The owner of Sydney’s The Star, Brisbane’s Treasury and Gold Coast’s Jupiters casinos has enjoyed unexpected growth over the second half at a time when the south-east Queensland casino market is poised to become even more competitive.
Echo posted a 3.9 per cent increase in full-year revenue to $1.8 billion, buoyed by The Star which the company says is “gaining traction” with customers following its $1 billion redevelopment.
The Star accounted for $1.2 billion of the revenue figure, with Echo reporting that most of that growth came from electronic gaming machines.
Queensland operations remain flat, with revenue down 3.7 per cent to $620 million.
However, EBITDA (earnings before interest, tax, depreciation and amortisation) for Queensland is up 3.9 per cent to $127.1 million.
Echo says the non-gaming sector in Queensland has been impacted by the lack of new attractions and a “difficult consumer environment”.
The VIP business, which involves luring big punters from interstate and overseas, has given Echo a lift, even though win rates are down on FY13.
VIP revenue rose 2.5 per cent to $396.5 million.
Operating expenses of $866.9 million are fractionally lower than FY13, and comfortably under guidance of $870 million. Expenses in Queensland are down due to lighter volumes.
Echo expects the momentum achieved in the second half of 2014 to continue into the current half-year.
“We have started FY15 the same way we finished FY14, with good momentum in our major properties,” says CEO Matt Bekier.
“We have three priorities this financial year – firstly, to continue growing earnings across the group through greater focus on our customers and prudent expense management.
“Secondly, we will deliver on the initial stage of the capital program to substantially redevelop and expand the Gold Coast property, and, thirdly, we are working hard to develop a compelling proposal for the Queen’s Wharf Brisbane development.”
Echo faces competition from the likes of James Packer’s Crown Group for a new Brisbane casino, while on the Gold Coast the ASF Consortium has been granted preferred status for a second casino licence for a new development to include a cruise-ship terminal in the Southport Broadwater.
Echo announced plans for a second hotel to be developed at Jupiters in time for the 2018 Commonwealth Games. Construction is due to start next year.
Echo is paying a final dividend of 4c a share, bringing the full-year payout to 8c.
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