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Wynn Resorts earnings hit by slumps in Las Vegas, Macau18 July 2012
By Chris Sieroty
Net income was $138.1 million, or $1.37 a share, compared with $122 million, or 97 cents a share, in the second quarter of 2011. Revenue was $1.25 billion, a decline from the $1.36 billion the company reported in the same period last year.
Analysts surveyed by Yahoo Finance expected earnings of $1.54 a share on revenue of $1.36 billion.
Wynn, chairman and chief executive of Wynn Resorts, said Las Vegas gaming revenues were hurt by a lower hold in baccarat. He described the decline in baccarat revenue as "short-term."
"Last year in Las Vegas were enjoyed a very high (hold)," Wynn told analysts on a conference call Tuesday. "Baccarat play tends to be volatile. The rest of the business was flat or slightly up in Las Vegas."
Wynn did not comment during the hourlong conference call on a Politico website report that he donated $10.1 million to Crossroads GPS, a political group founded by Republican strategist Karl Rove. The billionaire casino executive also avoided criticizing the Obama administration, a frequent target in previous conference calls with gaming analysts.
"No one can predict tomorrow. We have to be prepared for anything," Wynn said.
He described China's economy as being "more stable than anywhere else, even if things are a little sketchy."
Casino revenues at Wynn Las Vegas and Encore were $98.6 million, down 37.7 percent from the second quarter of 2011. Revenues for the second quarter in Las Vegas were off 11.6 percent to $345.6 million, while earnings before interest, taxes, depreciation and amortization declined to $81.9 million.
The company's Macau revenue fell 7.1 percent to $907.6 million, while EBITDA declined 3.9 percent to $302.2 million.
It was the first time revenue has declined in Macau in three years, and highlights the impact of new casino product on China's gaming industry and a slowdown in its economy. Las Vegas Sands Corp. in April opened its $4.4 billion Sands Cotai Central casino in Macau.
"We are very happy with our business in China," Wynn said. "Asia is starting to feel similar economic stresses to what Europe and the U.S. is feeling. I'm hoping we can be agile enough to adjust to those changes."
Wynn said the company had started work on its $4 billion Cotai project, its second Macau resort. The project includes 2,000 hotel rooms, 600 gaming tables, 10 restaurants, shops, a spa, meeting rooms and a nightclub.
Wynn described Cotai as an "ambitious and far-reaching project" that if done right will change Cotai much as the Bellagio and Wynn changed the luxury resort business in Las Vegas.
"This business is about amusement and self-indulgence on a certain level," Wynn said.
Wynn Resorts expects to close on a $2.3 billion loan, with an interest rate of less than 2 percent, in a couple of weeks. As of June 30, the company has spent $140 million on its Cotai project.
Shares of Wynn Resorts, which have been hit hard in recent months over worries about Asian growth and the company's legal battle with co-founder Kazuo Okada, gained 92 cents, or 0.95 percent, to close at $97.36 on the Nasdaq. In after hours trading Tuesday, the stock gained 63 cents, or 0.63 percent, to $97.99.
The company announced that it has approved a cash dividend of 50 cents a share, payable on Aug. 14 to shareholders of record on July 31.
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