Wynn Resorts Q4 profit falls 41%: Penn National Gaming profit down 54%

TAGs: Daily Mail, Macau, penn national gaming, Steve Wynn, Wynn Resorts

wynn-resorts-penn-national-gamingCasino operator Wynn Resorts reported net income of $111.4m in Q4 2012, down 41% over the same period a year earlier. That was well short of analysts’ estimates and pales in comparison to the $438m profit that rival Las Vegas Sands reported the day before. Interestingly, in a pattern Wynn established in Q3, its Nevada operations grew while its Macau operations stumbled. Overall Q4 revenues were off 4.1% to $1.29b, dragged down by a drop in Macau VIP spending plus higher interest costs and an extra $48m in income tax payments. For the year, Wynn reported net income of $502m on revenue of $5.15b, down from 2011’s net income of $613.4m on revenue of $5.27b.

In Nevada, revenue at Wynn’s Las Vegas operations rose 12.1% to $390.4m. Casino revenues were up 23.8% to $180.5m and non-gaming revenues got a 4.6% bump. Table game drop rose 14.3% to $679.4m with a better than expected win rate of 26.8%. Slot handle was up 14.9% to $758.4m with slot win rising 11.1% to $47.6m. Wynn’s Macau revenue fell 9.7% to $898.7m, thanks to a 6.6% slide in VIP turnover, which was only partially offset by a 1% gain in mass market table games revenue. Net income fell to $196.8m from 2011’s $239.9m.

On a post-earnings call with analysts, Wynn boss Steve Wynn revealed that the company will break ground on its new Cotai casino project on Feb. 11, the day after Chinese New Year celebrations. Wynn also said his Macau competition was “murder tough” and that rival gaming bosses like LVS’ Sheldon Adelson, Crown’s James Packer and Galaxy Entertainment’s Francis Lui were “triple sharp” and had “blood in their eye.” Wynn said that if one of his top execs comes back from Macau saying Wynn’s casino was “a dollar short and a day late on the high limit slot room … we don’t get to talk about that for months or ignore it. We have to respond now, on the spot, no kidding around, and we’ve got to bring our best game to the table … That’s a healthy thing … Monopolies cause people to be slobs, they don’t pay attention to business, they take everything for granted. That’s not the story in Macau today.”

The story in London is that Steve Wynn recently received a public apology from the UK’s Daily Mail tabloid, which had printed an article claiming Wynn’s 1980s bid for a London casino license had been rejected because of Wynn’s “alleged links to the mafia.” The Mail also apologized for claiming Steve “almost” lost his Atlantic City casino license in the 1980s due to alleged money laundering by organized crime members through his gaming joint.

Casino operator Penn National Gaming also released its Q4 report card on Thursday. Net income was $20.2m, down 54% from the $44m reported in the same period in 2011, due in part to a $100m rise in operating expenses. Nearly $24m of that sum came from Penn’s ill-fated attempt to influence Maryland voters on a ballot referendum issue in November. Overall revenues rose 10% to $743.8m during the quarter, although the two Ohio casinos Penn opened in 2012 have failed to live up to expectations.

For the year as a whole, Penn’s revenue rose 6% to $2.9b, while earnings fell to $212m from $242.4m. Regardless, investors and analysts have chosen to focus on the positives stemming from Penn’s decision to split the business into a casino operation and a real estate investment trust (REIT), a process that’s expected to be completed in H2 2013. Penn’s stock rose 1.54% on Thursday and shares were up a further 1.18% in after-hours trading at time of writing.


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