Melco Crown profit falls 83%, CEO says Macau VIP “will never be what it once was”

melco-crown-macau-vipCasino operator Melco Crown Entertainment (MCE) profit tumbled 83% in Q3 as the bottom line was laid low by Macau’s ongoing slump.

Revenue in the three months ending June 30 was down 24% to $916.8m while adjusted earnings slipped 35% to $204.9m. Net income fell to $24.3m from $143.6m in the same period last year. Company CEO Lawrence Ho said MCE had delivered a “solid” performance given the “challenging environment” in Macau, where gaming revenue has fallen for 14 straight months.

MCE’s flagship City of Dreams property reported revenue falling one-third to $654.2m. Reflecting Macau’s overall trend, the property’s VIP gaming turnover fell by one-half, while mass market table drop fell 10% and slots handle fell 26%. Non-gaming revenue dipped just 5%.

At Altira Macau, revenue fell 21% to $143.9m. VIP turnover was down 21% and mass table drop fell 15%. The Mocha Clubs slots halls saw revenue dip 10% to $33.2m.

In the Philippines, City of Dreams Manila reported revenue of $75m and earnings of $12.5m in its first full quarter of operations. VIP turnover was $495.8m, mass table drop was $116.6m, slots handle was $465.1m and non-gaming revenue came to $28.6m. Ho said the property is already outperforming its Entertainment City rival Solaire in visitation rates and that the domestic gaming segment was “growing very nicely.”

Regarding the question of how many gaming tables Macau officials will allocate the new $2.3b Studio City when it opens on Oct. 27, Ho maintains that MCE is still hoping to get the full 400 tables it has requested, rather than the 150 tables analysts expect Macau to authorize. On Thursday, Ho said that if Studio City ends up receiving “the low end of table allocations … it would have a drastic impact on our financial modeling.”

Expanding on remarks he made on Wednesday that the worst is over in Macau, Ho said he’d been encouraged by the fact that MCE’s premium mass market revenue in July had reverted back to historical levels and overall mass was up 15% to 20% from Q2’s figures. But Ho cautioned that he suspects Macau’s VIP market “will never be what it once was.”