|Tabcorp vulnerable to economic downturn
The Australian (National Metropolitan, 1 February 2009)
TABCORP Holdings Ltd is vulnerable to the economic downturn despite the solid first-half profit the gaming company reported on Thursday, chief executive Elmer Funke Kupper says.
"What we're very pleased with is that we came through the first half well and that we had a reasonable start to the second half,'' Mr Funke Kupper said in an interview with Sky News.
"But the reality is, like any retailer, we're exposed to the economy, and we all know uncertainty is going up and the economy is softening.''
Tabcorp on Thursday reported a net profit for the first half of 2008/09 of $263.2 million, down 3.7 per cent on the prior corresponding period. Mr Funke Kupper said the company had a "reasonable start'' to the second half.
The Australian economy has weakened significantly over the last few months, together with the global economy, and consumer spending, particularly on discretionary products, has slowed.
Mr Funke Kupper said Tabcorp expected trading this year to be "soft'' with hopefully a recovery the year after.
To bolster the company's financial positions, Melbourne-based Tabcorp sold $300 million of new shares to institutions last week, and will raise as much as $150 million from retail investors.
The money will be used to strengthen Tabcorp's balance sheet and increase its funding flexibility for the $475 million redevelopment of the Star City casino in Sydney.
Mr Funke Kupper said it was concerned about the "haphazard'' implementation of regulation and taxation in the industry.
In April last year, Victorian Premier John Brumby announced that the duopoly between Tabcorp and Tatts Group Ltd for the ownership of the state's 27,500 poker machines would end.
Shares in Tabcorp closed last week at $6.59. They were worth over $13 a year ago. | End