MGM Resorts International's second-quarter earnings fell 11% as
continued weakness in Macau was partly offset by growth in the Las
Vegas market.
The casino operator's shares rose 2.5% to $20.36 in recent
premarket trading as the results beat expectations. MGM also said
it has begun a revamp that aims to increase focus on streamlining
operations and boosting profits. MGM expects the multiyear program
to begin to show results as soon as the second half of this
year.
Chairman and Chief Executive Jim Murren said, "This plan will
redefine the way we operate in critical areas and position MGM
Resorts for future growth." However, the company's news release
Tuesday offered no specific details.
MGM has been under pressure from activist shareholder Land &
Buildings Investment Management LLC, which in May called off its
proxy fight. At the time, the activist investor praised some of the
company's actions but reiterated a need for "fresh voices" on MGM's
board.
Land & Buildings also said MGM's steps, including the hiring
of advisers to explore a possible move to form a real-estate
investment trust to manage its Las Vegas strip properties, could
help address MGM's "undervaluation and underperformance." The
activist investor had sought a spinoff of MGM's China business.
MGM and other big casino companies relied more on robust revenue
growth from their Macau operations to bolster results in recent
years. However, the gambling industry has seen a corruption
crackdown, and a weakening economy on the mainland cut into
business in Macau, the only place in China where casinos are
legal.
In the latest quarter, MGM China's revenue fell by a third to
$557 million, as VIP table games revenue slumped 43%. Main floor
table games posted a 23% drop in revenue.
Overall, MGM reported a profit of $97.5 million, or 17 cents a
share, down from $110 million, or 22 cents a share, a year earlier.
Revenue decreased 7.6% to $2.39 billion.
Analysts polled by Thomson Reuters expected a per-share profit
of 11 cents and revenue of $2.37 billion.
At MGM's wholly owned domestic resorts, which include properties
on the Las Vegas Strip and others throughout the U.S., revenue grew
4% to $1.7 billion.
Revenue per available room, a key measure of performance for the
lodging industry, improved 6% at the company's Las Vegas Strip
resorts.
Write to Tess Stynes at tess.stynes@wsj.com
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