James Packer steps down as Crown Resorts chairman

By
Newsdesk

Billionaire James Packer stepped down as chairman of Australia’s Crown Resorts Ltd on Thursday but said he would remain heavily involved in the company he owns half of as it faces declining revenues in the world’s biggest gambling hub Macau.
Packer’s surprise decision to take a less-public role in Crown, Australia’s biggest casino operator by market value, initially sent shares down to a one-month low as it coincided with a steeper-than-expected drop in its annual net profit.
The stock, however, recouped some of its losses after it became clear that Packer would still be involved in key projects in Crown’s A$10 billion (US$7.38 billion) development plans as well as its online business.
“Crown remains my number one business priority and passion,” Packer said in a statement. “I will continue to drive key projects, including our joint business in Asia and our planned resort in Las Vegas.” Interests overseas
Packer said heÂ’d focus on resorts that Crown is developing around the world, which include a planned casino in Las Vegas and a hotel for high-rollers on Sydney Harbour due to open in 2019. He recently sold his six-level Sydney harborside mansion, signaling he intends to spend less time in AustraliaÂ’s largest city.
“His departure is a big loss and itÂ’s not like a Packer not to see something through to completion,” Evan Lucas, a market strategist at IG Ltd. in Melbourne, said by phone. “The result was a little bit weaker on pretty much every metric and him leaving is a major problem. Where is CrownÂ’s growth?”
Net income after adjusting for one-time items and an unusual rate of winnings was A$526 million (US$389 million) in the 12 months ended June 30, Crown said. ThatÂ’s a drop of 18 per cent from a year earlier and matched the A$527 million average of 10 analyst estimates compiled by Bloomberg.
Crown shares closed down 3.2 percent at A$13.09. Echo Entertainment Group Ltd., CrownÂ’s main domestic competitor, rose 3.4 percent to close at a record A$5.15.
New chairman
Robert Rankin, a former Deutsche Bank AG banker and the chief executive of PackerÂ’s family company Consolidated Press Holdings Ltd., has been appointed as Crown chairman.
“Rob Rankin has my complete trust and respect as an executive and he will do an outstanding job as chairman,” Packer said in a statement. “Crown has a pipeline of resorts globally and this is where the majority of my time will be spent.”
Packer will continue as a director of Crown and remain co-chairman of the Alon Resort project in Las Vegas and Melco Crown Entertainment Ltd., which owns MacauÂ’s City of Dreams and Studio City resorts.
Packer has reached agreement with Crown to sell a 50 percent stake in his rural property at Ellerston, in the Hunter Valley north of Sydney, the company said.
Challenging Macau
The management changes come as Crown’s earnings from Macau, which make up about 40 per cent of its total revenue, shrank 44.6 per cent amid a downturn in the casino industry following a Chinese government crackdown on lavish spending and corruption.
The declining Macau earnings pushed Crown’s normalised net profit, which removes volatility linked to big spending gamblers, down 19 per cent to A$518.7 million, missing analysts estimates of A$531 million.
In a statement, Crown said it was optimistic about the long-term outlook for Macau, where it is due to open a new casino this year, even as it said the downturn in the industry’s gross gaming revenue had accelerated in the second half.
Chinese gamblers
Credit Suisse analysts, however, singled out Crown as one of the Australian companies likely to suffer the most from the recent devaluation of the yuan given its exposure to Macau.
In Australia, where casino gambling has attracted many of the wealthy Chinese gamblers that left Macau, Crown said its main floor gaming revenue increased by 6.9 per cent in Melbourne and 2.6 per cent in Perth over the 2014/15 financial year.
The company did not say how much of this increase was due to Chinese visitors, but rival Echo Entertainment Group Ltd said its annual net profit had leaped 59 per cent largely due to higher revenues from Chinese gamblers.