SkyCity Entertainment Group provided some welcome news to financial markets yesterday, advising that it expected to exceed consensus market profit expectations for the 2009 financial year.
SkyCity chief financial officer Alistair Ryan said in a statement to the New Zealand Stock Exchange, that due to improved fourth-quarter revenue and earnings across its core, casino operations in Auckland, Adelaide and Darwin, the company's revised expectations for the after-tax profit was in the range of $113 million to $116 million.
At the time of the company's capital raising in April, SkyCity referred to the then current analyst profit range of $99 million to $106 million and indicated that it was on track to achieve a result "comfortably within" that range.
Mr Ryan said the company's improved fourth-quarter revenue and operating earnings had led to a better-than-expected performance in the second half of the year.
Earnings before interest, tax, depreciation and amortisation were expected to be about $300 million.
Because the April equity capital raising was over-subscribed, net funding costs for the fourth quarter were less than anticipated.
Forsyth Barr broker Peter Young said his expectation had been that SkyCity was holding up well in the recession in New Zealand and the Australian operations continued to track well.
The share price had been held back recently following digestion of its large equity issue and the associated earnings per share downgrades from the dilution.
"We have been expecting SkyCity to deliver evidence of improved operational performance in second-half 2009 and full-year 2010 from management turnaround of core gaming operations.
"There is upside to our 2010 numbers and valuation [currently $3.24 a share] but we expect a challenging operating environment to remain in place in New Zealand given the weak employment outlook," he said.
SkyCity shares jumped more than 20% to a session high of $3.10, the highest in eight months, after hitting a seven-year low of $2.50 this year.
