Struggling Macau hurts Wynn Resorts’ fourth-quarter profits

Ulf Buchholz

The Wynn Macau is seen Aug. 17, 2011.

Wynn Resorts, the casino company that operates the Wynn and Encore on the Strip as well as a property in Macau, announced its fourth-quarter and full-year earnings today.

Company: Wynn Resorts Ltd. (Nasdaq: WYNN)

Revenue: $1.14 billion for the fourth quarter, a 25.1 percent decrease from the same time period in 2013. Wynn Resorts’ net revenue for the full year was $5.43 billion, down 3.3 percent from the year before. The company noted in its earnings press release that net revenue from its Macau operations dropped 32 percent in the fourth quarter, while net revenue from Las Vegas operations decreased 5.8 percent.

Earnings: $109.3 million for the quarter, almost half of the company’s $213.9 million net income from the same time period in 2013. For the year, Wynn Resorts’ net income was $731.6 million, up from $728.7 million in the year previously.

Earnings per share: $1.07 for the quarter compared to $2.10 in 2013’s fourth quarter. For the year, Wynn Resorts’ earnings per share rose to $7.18 from $7.17 in 2013.

What it means: The company’s rough fourth quarter is evident of larger struggles in China.

Gaming revenue in Macau, a special administrative region in China and the only place there where gambling is legal, just declined for the eighth month in a row. A government-led corruption crackdown is keeping some high-rollers away from the gambling hub.

Wynn Resorts’ net revenue in Macau was $761.2 million for the fourth quarter of 2014, down 32 percent from the same time period in 2013, when the company generated revenue of $1.12 billion.

“China remains a big question mark,” said CEO Steve Wynn on a conference call with analysts. “We have more questions than answers.”

Wynn Resorts has a lot invested in Macau’s success. The company already gets the bulk of its revenue from that market, and it’s currently building another resort there, the Wynn Palace. Wynn said he was recently notified that the more than $4 billion project probably won’t open in time for Chinese New Year in 2016, though he said it should still be ready sometime in the first half of next year.

In Las Vegas, Wynn Resorts’ net revenue was $376.8 million for the fourth quarter, down 5.8 percent from the same time in 2013. Casino revenue dropped 15.5 percent to $171 million, while room revenue rose 6.3 percent to $95.5 million, food and beverage revenue rose 5.3 percent to $103.3 million and entertainment, retail and other revenue rose 0.5 percent to $57.4 million.

Wynn said on the conference call that he expects his bottom line to benefit from the two big projects across the street from his property. Resorts World Las Vegas is slated to go in at the former Echelon site, and a group led by Australian billionaire James Packer announced plans last fall to build a resort where the New Frontier once stood.

The company is also moving forward with its plans to build a casino near Boston. Wynn said his company is “feeling great” about that project, and he noted that it presents a unique situation for them: Wynn Resorts has gotten used to excelling in competitive markets, but in Boston, he said, they’ll be “the only game in town.”

Gaming

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