Star Group Australia Loses on VIP, Posts Growth Nevertheless

• The Star Group grows market in Australian market
• VIP vertical losses a bit of momentum
• Star remains committed to capital-efficient expansion

The Star Group posted strong results for its Australian subsidiary, citing a growth in regular market, but weaker VIP results.

Star Group’s Australia Results Remain Strong

The Star Entertainment Group’s Australian subsidiary achieved an important milestone with the company generating 3.4% year-over-year and netting AUS$2.16 billion for the financial year completed on June 30, 2019.

Despite a dip in the VIP segment, Gross Gaming Revenue (GGR) in Australia kept strong thanks to a regular market which was in great shape. Overall, GGR grew by 3.6% to AUS$1.64 billion, giving a strong leg-up in terms of EBITDA. Based on EBITDA, the group had AUS$552.8 million, a 14.1% Year-over-Year (YOY) increase in the period.

In turn, this drove strong growth for both The Star Sydney and in the Queensland operations, to name the Gold Coast and Brisbane. Overall, the numbers were pretty convincing with the Group posting:

• 4% uptick in table games revenue
• 3.4% increase in slots
• Bigger market in Queensland

The group was pleased with the regular segment achieving an important growth trajectory, although earlier this year 400 jobs were put up for the axe. Commenting on the results, Star had this to say:

“Private gaming room performance in both slots and tables continued to outpace main gaming floor growth.”

The VIP Vertical Takes a Dip for The Star Group

Visitors went up over the period, but International VIP continued to slow down. Overall, the Star Group reported a 10% increase in terms of visitors, but the revenue in the VIP segment decreased substantially.

According to the official information provided by the company, The Star Group saw its segment crumble to AUS$4.4 billion, or a 7.1% dip. Meanwhile, turnover took another vicious dip, going down by 30.7% to AUS$42.4 billion.

The Star Group Chairman John O’Neill commented on the development:

“Over FY19, the Group completed a further year executing its growth strategy, with major projects at Queen’s Wharf Brisbane, The Star Gold Coast and The Star Sydney proceeding to plan. Record domestic revenues and earnings, reflecting continued positive reception by existing customers to recently delivered assets, have not offset declines in our International VIP Rebate business, which was impacted by weaker market conditions.“

Meanwhile, the Star Group Managing Director Matt Bekier noted that the company remained focused on pursuing a long-term strategy that would secure it better overall results as well as growth.

A number of properties were undergoing an upgrade presently, Mr. Bekier noted to “ensure a capital-efficient and de-risked growth.”