Australian Casino operator Crown Resorts Ltd has reported a slump in earnings due to the Coronavirus. Travel restrictions imposed on Chinese nationals has caused high rollers to stay away and the company reported a massive hit to their six-monthly profit report.
Huge Drop in Profits For Crown Casino
The Australian casino industry has proven to be heavily reliant on Chinese gamblers who visit in droves and risk fortunes in a single trip.
For the second half of 2019, normalised net profits for Crown Resorts took a huge drop of 11% – from A$172.7 million ($115.62 million). Chinese high roller activity dropped by more than one third over the same period.
The Coronavirus is causing a lot of uncertainty worldwide currently. Tourism in general across Asia has been hit due to the Chinese travel restrictions, and looks to get worse.
The illness has caused many deaths and there is still no sign of any slowdown.
It’s not just the Chinese that are staying away either.
Crown Resorts CEO, Ken Barton, said,
“People would be cautious about going into crowded places at the moment,”
From Bad to Worse
This latest trouble for Crown Resorts Ltd is just the latest bad news in a controversial few months for the casino operator.
In November 2019, a massive money laundering scandal hit the headlines. A video came to light showing a bag A$50 notes being exchanged for casino chips at the Crown Casino Melbourne.
This controversy led to the company taking out full page adverts in national newspapers to defend their reputation. The mainstream media ran with stories alleging money laundering along with breaches of Australian gaming legislation.
Not only that, but the Chinese tour operators were also linked to the Triads – a Chinese organised crime syndicate.
Low Confidence
With all this turbulent news raining fire on the Crown Casino group, it is no surprise that the share price has taken a hit.
The credit rating agency Moody’s issued a client note stating,
“Crown’s first-half 2020 results highlight a weak operating performance,”
Already this year the share price has dropped 3% with no sign of a turnaround.
Earlier this month Hong Kong’s Melco Resorts & Entertainment Ltd (MLCO.O) performed a u-turn on their plans to buy a 9.99% stake in Crown Resorts Ltd from 37% owner billionaire James Packer.
This purchase would have given momentum to restoring confidence in the company that is now heavily under pressure.
Moody’s gave further opinion on the situation saying,
“We expect the coronavirus will have a moderate impact on full-year 2020 earnings, with the company having reported softer trading conditions following the travel restrictions as well as general uncertainty around the virus,”
For now, the future is uncertain for the Crown Casino group. The negative publicity will eventually wane but with Chinese tourism coming to a grinding halt the Australian casino industry looks to be facing a bleak future in the short term.
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