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Crown Resort reports big H1 net profit drop on Macau casino slump

The Crown Resorts Ltd. logo is displayed at the entrance to the Crown Towers hotel, part of the Crown Melbourne casino and entertainment complex, in Melbourne, Australia, on Friday, Aug. 7, 2015.
Carla Gottgens | Bloomberg | Getty Images
The Crown Resorts Ltd. logo is displayed at the entrance to the Crown Towers hotel, part of the Crown Melbourne casino and entertainment complex, in Melbourne, Australia, on Friday, Aug. 7, 2015.

Crown Resorts, Australia's No. 1 casino company, said first-half net profit fell by more than a fifth as a Chinese corruption crackdown continued to hammer turnover at its resorts in the Asian gambling hub of Macau.

Net profit for the company, 53 percent owned by billionaire James Packer, was A$205 million ($147.5 million) for the six months to Dec. 31, from A$263.1 million the previous first-half, the company said in a statement.

"Normalised" net profit, a measure used by casino companies to strip out irregularities in win rates, dipped 35 percent to A$210.3 million, below the A$247 million average forecast of analysts polled by Thomson Reuters I/B/E/S.

"The 2016 first-half results across Crown's portfolio of businesses were varied," Chief Executive Officer Rowen Craigie said in a statement which gave no earnings guidance.

Crown's Sydney-listed shares were down 3 percent after the result, while the overall market rose 0.4 percent.

Through its one-third-owned Asia joint venture Melco Crown Entertainment, Crown has been hit by a revenue slump in the southern Chinese territory of Macau, where gambling sales have fallen for 20 consecutive months as a result of Beijing's corruption crackdown.

The company has also struggled to capitalize on a wave of rich Chinese gamblers who have forsaken Macau for more gambling-friendly destinations like Australia, where Star Entertainment beat it last year for the right to build a new casino in Brisbane city.

Crown has faced years of delays getting government approval to build a A$2 billion luxury casino in Sydney, leaving Star with a monopoly on gambling revenues in the biggest Australian city.

Those challenges have led to reports in Australian media that Packer, who quit the Crown board and announced his engagement to singer Mariah Carey in 2015, is talking with private equity firms about taking the entire A$9.1 billion company private. Packer has denied making such a proposal and on Thursday Crown said it had not received any such approach.

Crown's share of the Melco Crown normalized net profit tumbled 89 percent to A$9.4 million as overall gambling turnover in Macau, where the company opened a new Hollywood-themed resort in October, dipped 31 percent.

In its flagship casino in Australia's second-biggest city Melbourne, Crown said net profit slipped 1.2 percent to A$255.9 million as an 11 percent drop in VIP turnover was offset by a spike in "main floor" gambling revenue.

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