Rough ride looks over for Tabcorp investors

TABCORP boss Elmer Funke Kupper has signalled the end of the "rough ride" for his investors, delivering a better than expected first-half result and revealing that spring's equine influenza had not hurt as much as first thought.

Analysts said that after two years of disappointing performances, Mr Funke Kupper, who replaced sacked chief executive Matthew Slatter in July, had surpassed their low expectations.
Tabcorp shares had their biggest one-day gain since the company listed in 1994, as investors lifted the stock $1.01, or more than 7%, to $14.98.
Tabcorp's normalised earnings before items were down 3.1% to $261.9 million in the six months to December 31, beating the $247 million market consensus estimate.
Tabcorp said operating expenses fell 0.7% to $505 million in the half, compared with an 11.3% rise in the first half of 2007. Underlying expenses for the six months to December 31 rose 2%.
Normalised earnings before interest and tax from the company's four casinos rose 0.4% to $190 million, with the introduction of smoking bans causing gaming machine revenue in NSW to fall 9.7%.
The loss of four of the casinos' biggest players to Chinese gaming haven Macau also hurt, although the high-roller business contributes only about 5% to casino earnings.
In the gaming division — which includes slot machines and Keno in Victoria — earnings were adversely effected by higher taxes, rising 1.6% to $138.7 million.
Earnings in wagering slid 8.9% to $130.8 million after horse flu shut down racing in NSW for four months.
But while the outbreak slashed turnover by $347 million and reduced earnings by $16 million, Mr Funke Kupper said horse flu would cut full-year earnings by $20 million, and not $30 million as previously forecast.
This means Tabcorp, which last year forecast flat earnings growth for fiscal 2008, is expected to report a slight slowdown in growth for the full year.
Tabcorp shareholder Argo Investment's Rob Patterson said the company was doing better than expected.
"But having said that, I thought the outlook statement was a bit subdued," he said. "I'm a bit surprised about the share price. It's what I call a relief rally."
Tabcorp also announced plans to expand further the $300 million refurbishment of its Star City casino in Sydney. He said the company would detail plans later this year.
Tabcorp declared a fully franked dividend of 47¢, payable on April 9.