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Kerzner Profit Falls, Beats

A write-off sends first-quarter earnings down 6.9% from a year ago.
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Profits slipped at

Kerzner International

(KZL)

as the luxury resort and casino operator wrote off bets on the expansion of gambling in the U.K. Nevertheless, the company beat Wall Street forecasts on strong business at its Atlantis resort in the Bahamas.

Kerzner said first-quarter net income slid 6.9% to $38.0 million, or $1.01 a share, from $40.8 million, or $1.28 a share, a year earlier.

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The latest quarter included a write-off of $10.5 million, or 28 cents a share, for costs of planned casino resorts in the British Isles. Kerzner and other casino operators were forced to shelve U.K. development plans after the British government last month retreated on plans to allow multiple Las Vegas-style casinos. Kerzner said the write-off did not include costs from its Northampton project.

Excluding the write-off, adjusted earnings rose to $49.0 million in the latest quarter from $40.5 million a year before. On a per-share basis, adjusted earnings increased to $1.30 from $1.26 a year before. They were well ahead of the $1.19 average analyst estimate from Thomson First Call.

Revenue totaled $201.7 million, up 11.3% from $181.1 million in the first quarter of 2004. On average, analysts forecast revenue of $183.5 million.

Butch Kerzner, the company's CEO, attributed growth in adjusted earnings and revenue to the ultra-luxurious Atlantis resort on Paradise Island in the Bahamas. Net revenue at the property increased to $157.4 million from $148.8 million, and earnings before interest, taxes, depreciation and amortization, or EBITDA, grew to $63.2 million from $53.4 million. Revenue per available room, a key industry metric also known as revpar, increased 7% at Atlantis. Average occupancy was 87%, while the average daily room rate was $310. Slot machine win at the resort increased by 12% year over year, while winnings from table games were up 5%.

Kerzner shares finished Monday at $55.25.