Crown Resorts has seen a rough time as its profits have gone down drastically following the jailing of its Chinese workers and a down fall of its VIP program. This is according a financial report released by the company on Friday.
The report revealed that the company’s Australian based casinos recorded a 12.7 % drop in profits. The VIP program also dropped by close to half, recording a drop of 48.9%. This is the major cause of the drastic decline according to the report. The casino also recorded a decline in normalized net profit by 5.5 %.
The James Packers business is the largest casino operator in the country. According to John Alexander the company’s chairman executive, main floor gambling also reduced by 1.4 % and the company has had a difficult time this year.
This was revealed only a day after Mr. Packer made a came back and joined his company’s board of directors. Mr. Packer is so much into this business since it one of his primary businesses. He is therefore so much involved in whatever transpires in the business.
Crown shareholders have since expressed concerns over the poor performance in the 2017 financial year and also the drop in revenue from the casino’s gaming floor.
Crown’s marketing staff in China were arrested in June and convicted including Jason O’Connor who is the head of the VIP operations. This was such a major blow to the business since the VIP business was quite a catch for them.
Nineteen of those arrested pleaded guilty to the charges of promoting illegal gambling in China. This in return led to jail terms and also hefty fines amounting to $1.67 million which the company settled. The company, however, has remained silent on whether they are going to reemploy the ones facing jail terms once they have completed their sentence.
The company has responded to the Chinese blow by stepping back from their aggressive position in China. They have recalled their staff and sold their stakes to Melco Resorts and Entertainment in Macau. They are set to come up with a long term strategy once their staff is released from jail and reconsider about their investment in the VIP business in China. There is a possibility of the employees being released as close as next week.
The group’s future plan is to establish a multibillion dollar casino in Barangaroo in Sydney which should be complete by 2021. The VIP casino will serve both local and international gamblers. Crown made it clear that the dramatic drop in revenue will however not affect this mega project which is expected to be a great success.
Amidst all the difficulties, Crown has recorded some profits as well. This was after their sale of the Melco Resort and Entertainment in Macau of $1.7 billion totaling all profits to $1.9 billion in 2017. Therefore, there is still some hope for the group and all is not done for them seeing they recorded a 97% profit.