Wynn Resorts loses $140.6m in Q1; SJM Holdings posts $220m profit

TAGs: Japan, Kazuo Okada, Las Vegas, Macau, SJM Holdings, Wynn Resorts

wynn-resorts-sjm-holdings-q1Wynn Resorts Ltd. posted a net loss of $140.6m in Q1 2012, dragged down by poor performance at its Las Vegas properties. Overall revenues rose 4.2% to $1.31b, propelled by Wynn’s Macau operations, which saw revenues rise 9.8% to $951m. But it was a different story in Nevada, where general revenues fell 8.1%, reflecting a 19% fall in gaming revenue. (Thanks for nothing, visiting Asian baccarat whales!) The company has been struggling mightily over the past year to get costs under control and, with work about to commence on the company’s new Cotai strip project in Macau, spending will remain a concern for the next couple years. The ongoing distraction of the Kazuo Okada feud likely hasn’t helped the company’s focus.

Interestingly, Japanese experts have concluded that Wynn’s very public and very rancorous split with Okada may actually help its chances of garnering a casino license in Japan, once the country gets around to liberalizing its market. Kotaro Fujimoto, researcher at the Institute of Amusement Industry Studies at the Osaka University of Commerce, told Gambling Compliance that Okada’s strong ties to the pachinko industry (via Okada’s company Universal Entertainment) might have proved thorny for a Wynn casino license bid. As the only real casino-like product currently available to Japanese citizens, the pachinko business is expected to take a serious hit from the introduction of casinos. “By severing business ties with Okada, Wynn gets to bid for casino development without any strings attached.”

Meanwhile, SJM Holdings Ltd., Wynn’s crosstown rival in Macau, reported a 21.7% gain in Q1 profit. Net income rose to HK $1.7b (US $220m) based on an 8.5% rise in gaming revenue to HK19.7b ($2.537b). The numbers are doubly impressive considering the company’s share of the overall Macau casino market has shrunk from 31.9% in Q1 2011 to 27% this quarter (and even lower – to 25% – in April). Although SJM operates more than half of Macau’s casinos, the company is still waiting on approval to start construction on its first gaming operation on the lucrative Cotai strip.


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