Crown Cautious on New Investments as They Look for U.S. Based Invesment Opportunities

On August 21st, 2008, Crown commented that they are still in the hunt for U.S. based casino acquisitions despite scaling down some of its existing U.S. investments by $181 million. Crown cut down the $414 million book values of minority stakes in Harrah’s Entertainment and Stations Casino Group, 6 months after buying it. Its 19.6% share in Fontainebleau in Las Vegas was included in the write down, together with a $45 million incurred earlier this year when it abandoned plans for a Crown Las Vegas casino resort.

Despite the write downs, Crown CEO Rowen Craigie stated that the company, while cautious, had not become shy on making important investments. He said that they are just more careful on what project they will spend their money. Crown split from James Packer’s Publishing and Broadcasting last year, although James Packer remains its executive chairman. Crown Casino unveiled yesterday a $370.1 million normalized net profit for the year to June 30th.

Reported net profit of $3.56 billion was pushed by the results of discontinued operations and net gains from the split with PBL. Crown shares slide by 3 percent to $8.20 , with a scrip off almost forty percent since the beginning of the year. Normalized earnings before interest depreciation and amortization from the Crown Casino in Melbourne improved by 6.4% to $433.3 million, while normalized EBITDA from Perth’s Burswood casino were up by 12.6% to $195.3 million.

Mr. Craigie commented that tougher dealing environment together with problems meant that the earnings growth rate from the Australian casino division was likely to slow down from about 8.2% in the 2008 fiscal year to between four percent and six percent in fiscal year. He said that the earnings from the company’s high-roller customers would likely to buffer an earnings drop from the low end of the casino business.