Wynn Resorts Ltd.'s second-quarter profit fell sharply as
gambling revenue in China's semiautonomous territory of Macau
continued a downward spiral that started last year.
Gambling revenue in China's only legal gambling spot fell 2.6%
last year to $351.5 billion, the first annual decline since 2002,
when China opened the former Portuguese colony to foreign casino
operators. Macau has emerged as the world's gambling capital by
revenue, attracting some of the sector's biggest names and
gamblers.
For the first six months of the year, gambling revenue was down
37% from a year earlier period, according to figures from Macau's
Gaming Inspection and Coordination Bureau, as Chinese President Xi
Jinping's anticorruption clampdown scared off many of the
mainland's high rollers.
In addition, the Chinese government—which rules Macau by the
same "one country, two systems" arrangement as Hong Kong—tightened
its grip on the territory, toughening visa rules for mainland
Chinese visitors and increasing oversight of the debit cards many
gamblers use. Macau authorities have since eased some of the visa
restrictions for mainland visitors, signaling a policy shift that
may help the sector rebound.
Wynn, which last quarter swung to a loss, dragged down by its
Macau operations, and slashed its dividend to 50 cents from $1.50 a
share, has remained bullish on the Macau market, forging ahead with
its planned Wynn Palace in Cotai, a strip of reclaimed swampland
that is become prime ground for the megadevelopments. Wynn's $4
billion hotel is now expected to open by March.
"It took us two years to plan it. It's taken four years to build
it, a big, long project conceived by people with experience, and I
think will be a powerful addition to the Macau market, whatever
size that Macau market may be at the moment," Chief Executive
Stephen Alan Wynn said in a conference call with analysts last
quarter.
"We've never had a failure in this industry. We've never hit a
real bump. We don't do layoffs," Mr. Wynn said in the call in
April.
In addition to its majority stake in Wynn Macau, Las Vegas-based
Wynn owns a resort in Las Vegas and is developing one in Everett,
Mass., north of Boston.
For the quarter ended June 30, Wynn reported revenue from its
Macau operations fell 35.8% to $617 million. VIP table games
turnover, or the sum of all losing rolling chip wagers in the
segment, dropped 41.1%, with Wynn's win as a percentage of turnover
declining to 2.92% from 2.93%, still well within the company's
projected range of 2.7% to 3%.
Average daily rates fell 3.9% to $321, while occupancy fell to
96.4%, compared with 97.5% in the previous quarter and 98.4% a year
earlier.
Revenue per available room, a closely watched industry metric,
fell 5.8% to $310.
Meanwhile, revenue from its Las Vegas operations fell 6.2% to
$423.5 million. Room revenues edged up 0.9% as average daily rates
rose 2.1% to $289 and revenue per available room improved 1.6% to
$255. Occupancy was unchanged from the year-ago period at
88.4%.
Overall, Wynn reported a profit of $56.5 million, or 56 cents a
share, down from $203.9 million, or $2 a share, a year earlier.
Excluding preopening costs and other items, profit fell to 74
cents a share from $2.11 a share a year earlier.
Net revenue fell 26% to $1.04 billion.
Analysts surveyed by Thomson Reuters expected 96 cents a share
on $1.07 billion in revenue.
Total debt outstanding at the end of the quarter was $8.1
billion, Wynn said.
The results echo those of Las Vegas Sands Corp., the world's
largest casino company by revenue, which last week reported a 30%
drop in second-quarter profit, largely from the Macau downturn.
Shares, down 35% this year, edged up to $96.08 in late
trading.
Write to Maria Armental at maria.armental@wsj.com
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