Echo Entertainment Group does not fear James Packer’s probable entry into the Sydney casino market and is making plans to remain a strong competitor there after its exclusive licence expires.
James Packer’s Crown Ltd has proposed building a $1.3 billion resort and invitation-only VIP casino at Sydney’s harbourside Barangaroo development, to operate from 2019, when rival Echo’s exclusive licence expires.
The NSW government has favoured Mr Packer’s proposal over Echo’s rival $1.1 billion expansion plan for its Sydney casino, The Star.
Echo chief executive John Redmond said he did not fear competition from Mr Packer.
“It’s not something that we are worried about,” he told AAP on Thursday.
“We’re, obviously, developing a strategy over what to do (in Sydney), and that will not be divulged yet,” he told AAP.
Echo, which released its annual financial results on Thursday, described the NSW government’s response to its plan for The Star as disappointing.
But, it said, the benefits of being the incumbent sole casino operator in Sydney for at least another six years should not be under-estimated.
Echo said it continued to have productive talks with the Queensland government around a possible relocation of its Treasury casino in Brisbane and further investment in the Jupiters casino on the Gold Coast.
Chairman John O’Neill said both would be positive investments for Queensland and Echo shareholders.
Echo also operates the Jupiters casino in Townsville.
Mr Packer has flagged a move to take on Echo in Queensland, saying Crown’s rival had done a terrible job at its casinos there.
Mr Redmond said there was an opportunity to make a significant investment in casinos in Brisbane and southeast Queensland.
But until there was more certainty around what the Queensland government wanted in this regard, Echo would not divulge any plans.
Echo on Thursday said its 2012/13 net profit rose 97.9 per cent to $83.5 million.
The result was skewed by higher income tax and restructuring costs in 2012/13 and higher finance costs in the previous year.
Echo’s reported earnings before interest, tax, depreciation and amortisation (EBITDA), excluding significant items, rose 12.1 per cent to $372.9 million.
The Star generated 17.5 per cent more revenue, but revenue from the Queensland properties fell 3.3 per cent.
Echo said revenue in the first seven weeks of the current financial year was up 6.8 per cent, with strong growth in VIP revenue offset by softer performance in the domestic business.
Shares in Echo were four cents, or 1.47 per cent, higher at $2.76 at 1322 AEST.