Reef Casino Sinking

17 April ASX announcement:

The Trust’s distributable profit* for the 1st half year from 1 January 2019 to 30 June 2019 is currently estimated to be between $1.7 million to $3.0 million. This current estimate is lower than the actual result for the same period last year. This is due to :-
 Softness in Cairns tourism – at a level not experienced for a number of years, made worse by an extraordinary wet season in the 1st quarter of the year.

 Short term variability in casino table gaming because of a soft gaming and Chinese tourist market including a soft Chinese New Year season, at a level not experienced in recent years.

 A subdued local economy due to soft tourism and increased local competition which has had an impact on casino slots gaming and to a lesser extent on hotel accommodation. A further update will be provided at the Annual General Meeting on 24 May 2019.

 

Then the AGM on May 24:

On 17th April 2019, a trading update advised that the Trust’s distributable profit for the 1st half year from 1 January 2019 to 30 June 2019 was estimated to be between $1.7 million to $3.0 million. Our current estimate of the distributable profit is between $1.2 million to $1.7 million.

Looks like this:

Reef Casino 1H18

The blue 2019 bar is the top end of the revised 2019 range.

How are the numbers on a global tourism hub anchored by a new casino working out again?

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Airport April: dead cat bouncing?

April brought some respite for Cairns Airport with a positive growth number breaking a run of negative months. However we should recall our comments from last month:

There will be no excuses in April with the tailwinds into Cairns all positive from the later Easter shift and a scheduled domestic capacity increase from Qantas.

While international at 6.4% lifted total growth to 1.5% the concern is domestic at just 0.7% despite the Easter shift and capacity increase. That doesn’t look like a good number at all in context and also following this weeks profit downgrade and commentary from Experience Co. Annual growth remains negative at -2%.

Airport April 1Airport April 2Airport April 3

 

Numbers from Sydney airport next week should provide some benchmark comparison. Will have to wait a while for BITRE data for more detail on capacity and routes for April.

Update from Sydney Airport:

“Domestically, subdued load factors and continued capacity management by airlines drove a reduction in domestic passengers for the month despite the later Easter holiday.”

Maybe April wasn’t that bad at least in a relative sense with domestic down -1.3%.

 

Experience Downgrade

Experience Co has yet again downgraded profit guidance due to performance of the Cairns related businesses.  But, “considering the arrival of the late season Cyclone Ann which has temporarily grounded our adventure experiences and skydiving activities, we have revised FY19 guidance.” Cyclone Ann? Huh?

 

ASX RELEASE
16 May 2019
TRADING UPDATE AND REVISED FY19 GUIDANCE Experience Co Limited (“Experience Co” or “the Company”) (ASX: EXP) today announces the following trading update and revised FY19 guidance.
Softer trading conditions in Far North Queensland (FNQ) highlighted in our half year results announcement have continued to impact the region’s tourism market which is experiencing a pronounced challenging period of trading.
Market trends impacting tourism operators in the region include:

• Passenger volumes into Cairns airport are down on the prior year, with the year-on-year international volumes impacted by the reduction in services into the region by international carriers such as China Southern.

• Domestic airlines have reduced their capacity into Cairns and continue to operate high load factors impacting relative affordability compared to international destinations.

• FY19 total passenger numbers ex-Cairns to the Great Barrier Reef are projected to be more than 12% down on prior year with EXP Great Barrier reef volumes expected to be down circa 8% over the corresponding period.

These factors have impacted our earnings in the region, in particular higher yielding activities on the Great Barrier Reef, operated by our Big Cat, Reef Magic and Great Barrier Reef Helicopter brands, with revenue loss and mix relative to forecast, driving a decrease in EBITDA margin, given the operating cost leverage of the FNQ adventure experiences.

In our FNQ skydiving operation we have revised volume expectations down by approximately 4,000 (circa 20%) tandem jumps for 2H19, the decrease being predominately in the April to June period.

Following a review of our Easter holiday trading in late April and into early May and considering the arrival of the late season Cyclone Ann which has temporarily grounded our adventure experiences and skydiving activities, we have revised FY19 guidance.
As a result, revenue for FY19 is expected to be down by circa 4% compared to previous expectations and Underlying EBITDA is expected to be in the range of $27m to $28m.

The core skydiving business in Australia (excluding FNQ) and New Zealand remains solid and is tracking to expectation for the remainder of FY19. Our expectation for full year growth in tandem jump volumes is circa 5% on the prior period across these markets.

The medium-term outlook for the Cairns tourism market remains positive, however we expect the prevailing challenging trading conditions to continue into FY20. Given the fixed cost intensity of our FNQ operations, management is proactively reviewing its assets, product mix and ongoing strategies to increase its market share during this weaker trading period.

Fiona van Wyk Company Secretary f.vanwyk@experienceco.com