Crown Resorts Issues Profit Warns of 2021 Fiscal Year Losses
Just as you think there is nothing more that could damage Crown Resorts’ reputation, the casino giant issues a profit warning to investors. Crown Resorts warned investors to expect financial losses for the 2021 fiscal year.
Crown’s 2021 fiscal year ended on June 30, 2021, and it reports its figures on August 30. The Australian casino and hotel giant warned investors to expect a loss after tax. It expects its EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation) to be between $240 million and $250 million. However, this is not a figure large enough to cover its liabilities.
The last set of financial figures from Crown, for the fiscal year 2020, made sorry reading. The company reported a $79.5 million profit, down from $401.8 million the previous year. This year, an actual loss is expected, especially when you consider Crown paid by a chunk of its debt.
Crown revealed its balance sheet is showing approximately $900 million of debt. This vast amount is partly down to $1.7 billion of financing for the Crown Sydney integrated resort. Crown has repaid $450 million of that sum.
Outlook For the 2022 Fiscal Year
The 2022 fiscal year could also be rocky for Crown and its investors. It expects COVID-19 related closures and operating restrictions to continue negatively impacting its business.
Furthermore, the company’s cessation of using junket operators will affect Crown’s balance sheet, as will a review into its high roller/VIP customers.
“Crown’s ongoing review of its top-end local players is resulting in the exit of a number of customer relationships.”
The area that has the potential to ruin Crown entirely is the outcome of the royal commission. The investigation into Crown’s affairs has left its reputation severely tarnished. A review into its responsible gambling procedures, for example, painted a sorry picture.
With that in mind, Crown has employed 70 full-time employees across its Financial Crime & Compliance and its Responsible Gaming departments.
There is a genuine possibility the royal commission will ask for Crown to surrender its Melbourne licence; its Perth property is also under threat.
Crown Claims It Could Default On Its Heavy Debts
The share price of Crown plummeted in the afternoon of July 9 when news broke about Crown possibly defaulting on debts. Shares in Crown traded at $11.16 shortly after trading began. It dropped to $10.76 before recovering to $10.99.
Details of a letter Crown’s external lawyer became public knowledge. The letter states Crown’s employees will suffer if the company defaults on its debts. Defaulting on its debt is a real possibility if the royal commission rules against Crown keeping its Melbourne licence. That would have a significant impact on the company’s 2022 fiscal year figures.
“It is not in the public interest for Crown to fail. Through COVID-19, employees have suffered significant uncertainties. They will suffer greater uncertainties if there is an Event Of Default (EOD). An EOD may also provide potential overseas suitors an opportunity to take advantage of the situation.”
Commissioner Ray Finkelstein said the letter was sent to “make sure the commission doesn’t make a particular finding.”
Crown’s chairman Helen Coonan denied the company is trying to interfere with the royal commission. We will leave you to make your own minds up if that is true or not.
Packer Spotted On His Superyacht
A rare sighting of James Packer was made recently. The billionaire was told in no uncertain terms to stay away from Crown’s operations. He took that advice literally and sailed off to the Greek island of Mykonos on his $200 million boat.
Packer and his friend Ben Tilly posed for photographs with three Instagram influencer models. In addition, Packer’s girlfriend of three years, Kylie Lim, was nowhere to be seen. The underfire businessman is considering a multi-billion offer for his Crown shares.
