‘Challenging conditions’ widen Crown losses as regulatory decisions loom

Crown Resorts Melbourne, Victoria

Crown Resorts is working to “build momentum on our company-wide reforms” in a bid to advance “multiple regulatory processes,” following a H1 ending December 31, 2021, that reflects “continued challenging operating conditions”.

Citing the impacts of ongoing regulatory matters as well as COVID-19 mitigation measures, the embattled Australian casino operator reported a H1 loss of A$196.3m, which widened from the A$120.9m posted one year earlier. 

Statutory revenue of A$778.6m is up 34 per cent year-on-year with EBITDA closing the period at a loss of A$47.5m, down from a profit of A$4.4m year-on-year.

The group also reported financial closure impacts of A$79.2m (net of tax), which includes costs incurred at Crown Melbourne, Crown Perth and Crown Sydney whilst the properties were closed under government direction.

Crown will subsequently be looking at its reopened domestic properties to rebound from the pandemic related closes, however, it is noted that the emergence of the Omicron variant across New South Wales and Victoria has negatively impacted its trading performance through the turn of the year.

“While we do not underestimate current headwinds facing Crown, there is growing confidence we have turned the corner,” commented Steve McCann, Crown’s Managing Director and Chief Executive Officer.

“All three of our domestic resorts are back open, with a vaccination strategy to combat COVID-19 providing a pathway forward for our staff, the business and the wider community.

“Importantly, we continue to build momentum on our company-wide reforms, accelerating work on our remediation plan and making significant advances across multiple regulatory processes. 

“Not only are we building a stronger business, we are working well with the regulators with a priority to deliver a safe and responsible world-class gaming operation.”

This comes as Crown, which earlier this week backed an A$8.9bn (US$6.3bn) takeover by Blackstone, continues to work on opening the suspended gambling operations at its Sydney property after an investigation deemed the company unfit to operate the $2.2bn Crown Sydney Hotel Resort.

October 2021 also saw Crown retain its Melbourne casino licence, despite a Victoria royal commission deeming the group to be “unsuitable” on the basis that it engaged in “illegal, dishonest, unethical and exploitative” conduct.

In Western Australia, the company is awaiting the publication on the concluded Perth casino royal commission, which is due by March 4, 2022, while the group’s Melbourne and Perth venues await the outcome of an AUSTRAC inquiry for potentional breaches of anti-money laundering and counter terrorism financing laws.

“Crown considers that AUSTRAC is very likely to commence civil penalty proceedings against Crown Melbourne and Crown Perth,” the company updated. 

“If it does so, it is likely that Crown Melbourne and Crown Perth will be required to pay significant civil penalties. 

“At this stage it is not possible to reliably estimate the amount that Crown Melbourne and/or Crown Perth may ultimately be required to pay if civil penalty proceedings are commenced.”

Offering an outlook for the business following the headwinds encountered thus far during 2022, Alan McGregor, Crown’s Chief Financial Officer, stated: “Unfortunately, the emergence of the Omicron variant and the resulting significant increase in COVID-19 case numbers across both Victoria and New South Wales has had an impact on our trading performance to begin the calendar year, with reduced patronage and a number of staff required to isolate. 

“We are also seeing subdued performance in Perth, with increased uncertainty from COVID-19 and the recent imposition of new restrictions significantly impacting patronage to the property.

“Whilst these near-term challenges are currently impacting business performance, we remain confident in the long-term outlook for the business as we embed the reforms contained in our remediation plan and normal consumer patterns return as society learns to live with the virus.”