Casino operator MGM Resorts says it will delay the opening of its new Macau property due to that market’s ongoing revenue slump.
MGM announced its Q4 and FY15 results on Thursday, reporting similar results as the two other US casino operators with business in Asia, with domestic operations improving and Macau business declining.
For the three months ending Dec. 31, MGM reported revenue falling roughly 8% to just under $2.4b, while operating income swung from $266m in Q4 2014 to a $1.2b loss. Net losses were up more than five-fold to $1.47b.
The net loss was pinned primarily on a $1.5b write-down related to “market conditions” plaguing its MGM China subsidiary, which runs the company’s Macau business.
MGM China reported Q4 revenue falling 31% to $499m thanks to declines in both VIP (-49%) and mass market (-14%) table game revenue. Adjusted earnings fell 29% to $131m despite improved margins provided by a shift in emphasis from VIP to mass tables.
Macau’s 20-month losing streak shows no sign of abating, leading MGM to make the “strategic decision” to delay the opening of its new MGM Cotai property from Q4 2016 to the end of Q1 2017. The company claims the delay is also intended to avoid clashing with the other two new Macau properties – Wynn Palace and Parisian Macao – scheduled to open in 2016.
Mirroring recent earnings reports by Las Vegas Sands and Wynn Resorts, MGM’s domestic operations outperformed Macau. Revenue at MGM’s wholly owned domestic properties rose 2% in Q4 despite a 5% fall in gaming revenue. Both slots and table revenue declined, with tables suffering declines in both turnover and win percentage. Domestic earnings were up 15% to $431m.
Revenue from MGM’s partial ownership of CityCenter/Aria came to $19.3m in !4, a dramatic turnaround from the $18.1m loss a year ago. MGM’s 50% stake in Atlantic City’s market-leading Borgata casino produced revenue of $16.2m, up 44% year-on-year on strong gaming revenue growth.
For the year as a whole, MGM’s overall revenue fell 9% to $9.2b, while earnings rose 2% to $2.5b. Wholly owned domestic property revenue was up 2% to $6.5b and earnings rose 11% to $1.7b. It was the opposite story at MGM China, where revenue fell one-third to $2.2b and earnings fell 36% to $540m.
As for MGM’s plan to launch an initial public offering of MGM Growth Properties, its real estate investment trust subsidiary, the company says it has filed all its applications with the Securities Exchange Commission and with gaming regulators in the markets in which MGM operates, and is making “great strides” in obtaining the necessary approvals.
