The Crown Resorts Ltd (ASX: CWN) share price has been among the biggest movers on the market in morning trade following the release of its full-year results.
At the time of writing the casino and resorts operator's shares are up almost 3.5% to $13.80.
What happened in FY 2018?
For the 12 months ended June 30 the company reported an 8.4% increase in normalised revenue to $3,511.3 million and a 12.7% increase in normalised net profit after tax to $386.8 million.
On a reported basis revenue came in 4.5% higher at $3,493 million and net profit after tax was down 70% to $558.9 million.
It is worth noting that last year's reported result included various one-offs including the $1,745.5 million net gain on sale of Melco Resorts and Entertainment and $260.2 million of restructuring and other expenses. This year's result also included one-offs such as the sale of CrownBet.
On the bottom line the company achieved diluted earnings per share of 81.2 cents. Of which 74% of this was paid out as dividends after the Crown board declared a 30 cents per share partially franked final dividend, bringing it full-year dividend to 60 cents. This equates to a yield of just over 4.3% based on its current share price.
Finally, net operating cash flow for the period was $731.7 million compared to net operating cash flow of $465.7 million in FY 2017.
What were the drivers of the revenue and profit growth?
According to the release, its Australian resorts segment saw main floor gaming revenue rise 1.5% during the period to $1,681 million, non-gaming revenue increase 4.1% to $747.7 million, and VIP turnover jump a whopping 54.5% to $51.5 billion.
Executive chairman John Alexander stated that its Melbourne operation was the star of the show during the year and helped offset continued subdued trading in Perth.
Crown Melbourne's VIP play was a particular highlight and was up 73.9% on the prior corresponding period. In addition to this, its portfolio of hotels in Melbourne all enjoyed high occupancy levels, which management believes reflects the very strong demand for luxury hotel accommodation in Melbourne. The average occupancy rate for its hotels in Melbourne was approximately 95%.
The same cannot be said for its Perth hotels which saw occupancy levels range from approximately 77% to 90%.
The Crown digital segment had a reasonably positive 12 months. Although its revenue fell 3.4% to $293 million, expenses dropped by 7.8% to $266.1 million. This ultimately led to earnings before interest and tax of $12.1 million, compared to a loss of $7.5 million a year ago.
Management hasn't provided any guidance for FY 2019, but its earnings per share should be given a boost from a new on-market buyback.
As Crown was only able to buy back approximately 1.43 million shares under its current share buy-back, it intends to undertake a new on-market share buy-back totalling $400 million. This is expected to commence on August 30 2018 and could lead to the repurchase of approximately 30 million shares or 4.4% of issued capital.
Should you invest?
I thought Crown delivered a strong result today which was even better than yesterday's result from rival SKYCITY Entertainment Group Limited (ASX: SKC).
In light of this, I continue to believe that it would be a great option for investors and a great way to gain exposure to the tourism boom that Australia is experiencing. This could make it worth a closer look along with rivals SKYCITY and Star Entertainment Group Ltd (ASX: SGR).
