Wynn Profit Falls on Steep Declines in Macau

By Maria Armental 

Wynn Resorts Ltd.'s fourth-quarter profit fell sharply as the casino operator reported steep declines at its operations in Macau, China's semiautonomous gambling hub.

A corruption crackdown, tighter regulations and a weakening economy on the mainland have cut into business in Macau, the only place in China where casinos are legal. Chinese government officials have said they plan to expand a smoking ban that went into effect in October, prohibiting smoking anywhere in a casino, including VIP rooms.

Since June, when Macau reported the first year-over-year monthly decline in overall gambling revenue since 2009, gross revenue has declined every month, ending the year down 2.6% from 2013. In January, gambling revenue shrank another 17% to 23.75 billion patacas ($2.97 billion), according to Macau's Gaming Inspection and Coordination Bureau.

For the most recent period, Wynn reported revenue from its Macau operations fell 32% to $761.2 million, with table games turnover in its VIP segment declining 39.9%.

Average daily rates rose 5.4% to $332, while occupancy reached 98.6%, compared with 96.7% for the year-earlier period.

Revenue per available room, a closely watched figure to measure performance in the industry, rose 7.9% to $328.

Chief Executive Stephen Alan Wynn told investors in a conference call to discuss third-quarter results in October that Wynn remained "very bullish" on Macau, saying he expected a slight improvement of mass market margins citing a "dramatic capacity increase" in its Macau hotel in January along with the planned opening of Wynn Palace in Cotai in the first half of 2016.

In addition to its majority-stake at Wynn Macau, Las Vegas-based Wynn Resorts owns a resort in Las Vegas and is developing a resort in Everett, Mass., north of Boston.

In the latest period, Wynn's Las Vegas operations posted a 5.8% decrease in revenue to $376.8 million. Average daily rates rose 5.9% to $271, and occupancy improved to 82.1% from 80.8%. Net casino revenue fell 15.5% to $171 million.

Revenue per available room rose 7.2% to $222.

Overall, Wynn reported a profit of $109.3 million, or $1.07 a share, down from $213.9 million, or $2.10 a share, in the year-ago period. Excluding preopening costs and other items, profit fell to $1.20 from $2.27 a share a year earlier.

Net revenue fell 25% to $1.14 billion.

Analysts surveyed by Thomson Reuters expected $1.43 a share on $1.21 billion in revenue.

Write to Maria Armental at [e-mail]

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