Crown Resorts Expects Loss At The End Of 2021 Fiscal Year

Crown Resorts, the biggest operator of land-based casinos in Australia, expects to report a significant decline in earnings for the 2021 financial year, mainly due to the impact of novel coronavirus restrictions on the business.

The company reported that for the 12 months to 30 June 2021 its theoretical earnings before interest, tax, depreciation and amortisation (EBITDA) is forecast to be around 250 million Australian dollars. Compared to the 2020 fiscal year, the decrease is quite sharp, from 503.8 million to just under half of that.

Crown Resorts added that the reported results have been adjusted to exclude the eventual impact of variance from theoretical win rate on the company’s VIP program at the Melbourne, Perth and Crown Aspinalls casinos.

The company had to withstand additional costs during the past year, even when the gaming facilities were closed following government-enforced Covid-19 restrictions. Crown Resorts mentioned that it had to pay staff salaries even while they were not working.

Crown’s venues have been closed for weeks on end over the past 18 months as governments tried to slow the spread of the novel coronavirus. At certain times facilities were able to reopen, but with strict restrictions like capacity limits that had a significant impact on the company’s revenue.

Along with the declining revenue, Crown Resorts also reported that it expects to have a statutory loss after tax for the full 2021 fiscal year. However, this result will have to be reviewed by the board and management, along with external auditors, before being definitive.

The company’s debt for the year is expected to be around 900 million dollars. However, 450 million of that financing, which was secured last year to support the construction of Crown Sydney, has already been repaid from apartment sales at the Barangaroo site.

Crown Resorts is currently the subject of takeover bids from several powerful entities. In March, private equity giant Blackstone Group made an offer of 8 billion dollars to acquire 90.1% of the Crown shares, with the American group already owning 9.99 percent. The offer was since then increased but Crown rejected it.

The latest bid came from Australian land-based operator Star Entertainment Group, which proposed a merger with Crown that would create a combined operation worth around 12 million dollars. Crown Resorts has not yet made a decision on this proposal.

Source: “Trading and Earnings Update“. Crown Resorts ASX media release. July 5, 2021.