Crown Resorts (ASX:CWN) share price rises despite earnings hit

The Crown Resorts share price is bouncing around this morning following release of the HY2021 results. Here’s what we found out.

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Crown Resorts Ltd (ASX: CWN) shares opened higher today despite the casino operator reporting a significant earnings hit in its FY21 half-year results (1H FY21). Soon after open, the Crown share price quickly lost ground, only to recover again to its current level of $9.80, up 1.14% for the day so far.

Here’s a summary of how Crown has been performing.

Crown share price resilient despite revenue falls

The Crown share price is holding its own today regardless of the company reporting a 62.1% drop in statutory revenue to $581 million for the reporting period. 

Operating cash flow also tumbled from $419.1 million in 1H FY20 to $72.3 million in 1H FY21.

Earnings before interest, tax, depreciation and amortisation (EBITDA) took a massive 99% hit, coming in at $4.4 million. This compares to $446 million in EBITDA reported for the prior corresponding period.

These heavy reductions in revenue and earnings are mainly attributed to Crown Melbourne having remained closed for much of the first half due to trading restrictions associated with coronavirus.

As a result, the Crown board determined not to declare an interim dividend on ordinary shares.

CFO comments

Commenting on the impact of COVID-19 across various Crown Resort sites, chief financial officer Alan McGregor said:

Crown’s first half results reflect the severe impact on operations from the COVID-19 pandemic. In particular, Crown Melbourne was closed for most of the half.

Crown Perth re-opened with restrictions towards the end of June 2020 and has traded above expectations despite ongoing COVID-19 restrictions, and limited marketing and promotional activity… 

Crown Melbourne has progressively recommenced operations from November, albeit with only limited initial access to the property. Since the easing of restrictions on 9 December, results had shown improvement but continued to be impacted by ongoing limitations on capacity…

Crown Sydney opened in a restricted capacity in late December and, while gaming operations are yet to commence, the non-gaming elements have seen encouraging property visitation.

Crown share price snapshot

The Crown Resorts share price has fallen by around 17% over the past year. Crown shares fell as low as $6 during March 2020 before surging more than 60% to their current levels. The company has been regularly making news regarding the New South Wales Independent Liquor and Gaming Authority’s inquiry into its suitability to hold a gaming license. 

Based on the current Crown Resorts share price, the company has a market capitalisation of $6.6 billion with 677.2 million shares outstanding.

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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