The SKYCITY Entertainment Group Limited (ASX: SKC) share price will be on watch this morning following the release of its half year results.
What happened in the first half?
During the first half the company's International Business achieved an actual win rate of 0.98%, which was below the theoretical win rate of 1.35% and the prior corresponding period's actual win rate of 1.7%.
As a result, for the six months ending December 31, SKYCITY posted a 1% increase in reported revenue on the prior corresponding period to NZ$460.2 million and an 11.4% decline in reported profit after tax to NZ$82.8 million.
On a normalised basis, which sets the International Business win rate to a theoretical win rate of 1.35% and adjusts for certain revenue and expense items, revenue increased 10.9% to NZ$598 million and net profit after tax rose 11.4% to NZ$97 million. This was in line with guidance provided late last month.
On the bottom line normalised earnings per share came in 10% higher at 14.3 NZ cents per share. The SKYCITY board opted to maintain its dividend at 10 NZ cents per share.
What were the drivers of the result?
The key Auckland segment was the company's best performer during the period, growing revenue by 6.2% to NZ$307.7 million and EBITDA by 5.3% to NZ$138 million.
The Hamilton and Queenstown segments both achieved revenue and EBITDA growth as well during the half, offsetting a decline from the company's Adelaide segment which is undergoing a major renovation.
Elsewhere, the International Business segment achieved normalised EBITDA growth of 164.5% to NZ$24.7 million.
Outlook.
Management warned that the domestic and international economic environment is becoming more challenging, leading to second half trading falling below expectations.
But thanks to the solid first half, normalised group NPAT is expected to be slightly above the prior corresponding period, compared to previous guidance of a slight decline.
Should you invest?
On a normalised basis I thought this was a solid result from SKYCITY, but its weak start to the second half means I won't be gambling on its shares just yet.
Further, it may be worth waiting for upcoming updates from Crown Resorts Ltd (ASX: CWN) and Star Entertainment Group Ltd (ASX: SGR) before considering their shares as well.
