Wynn, Casesars Q2 earnings fall short

Published July 29, 2013 1:53 pm

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LAS VEGAS • Wynn Resorts Ltd. said Monday that it made less money than expected in the Chinese gambling enclave of Macau, and its second quarter missed analysts' forecasts.

Casino operator Caesars Entertainment Corp. posted a smaller loss for its fiscal first quarter on Monday, but results still missed expectations as slots and tables drew fewer gamblers.

Excluding special items, Wynn made $1.51 per share on revenue of $1.33 billion in the latest quarter.

Analysts polled by FactSet forecast, on average, earnings of $1.57 per share on revenue of $1.34 billion.

Revenue from Wynn's two properties on the recently sluggish Las Vegas Strip soared by 16.2 percent compared with last year. But revenue in the usually robust Macau market was up by just 2.6 percent, due in part to hotel renovations that limited the number of available rooms.

Caesars owns or manages more than 50 casinos, most of them in the U.S. and Britain.

The company saw casino revenues decline by $116.8 million, or 7.5 percent. CEO Gary Loveman said food and beverage sales may ultimately replace those dollars.

Caesars said that its net loss for the three months ended June 30 shrank 12 percent, to $212.2 million, or $1.69 per share, from $241.7 million, or $1.93 a share, last year. Revenue edged down to $2.16 billion.

Analysts had expected a smaller loss of $1.40 per share on higher revenue of $2.18 billion, according to FactSet.

In a conference call with analysts Monday, CEO Steve Wynn warned against interpreting the relatively strong showing in Las Vegas as a sign that Sin City is finally bouncing back along with the rest of the U.S. economy from the crushing blow dealt by the Great Recession.

"I think we are having a limp-wristed sort of crawl out of a hole, but a recovery is a more robust word," he said.

Instead, the billionaire casino mogul attributed the jump in revenue from the Wynn Las Vegas and Encore casinos to the "premium niche" the company has carved out in Macau.

"Our brand, because of the market segment we cater to, tends to benefit from the international market. In these emerging markets, a lot of people are enjoying success outside the United States, and they make their way to Las Vegas. And I think that we are one of the first choices for that kind of visitation," he said.

Wynn noted that the company is refurbishing 600 rooms in the Wynn Macau Resort, which opened in 2006, and the renovations have taken a sixth of the available inventory out of commission.

An hour from Hong Kong by ferry, Macau is the only place in China where casino gambling is legal, and has become the biggest gambling center in the world, as the Chinese middle class has expanded in recent years.

Revenue per available room, or revpar, at Wynn Macau increased 5 percent to $300. The metric is a key gauge of a hotel operator's performance.

The company is building a second Macau casino resort in the peninsula's Cotai district expected to open in the first half of 2016.

Total revenue was up by 6.3 percent, but income was down 6 percent, to $129.8 million, in part because the company retired debt early.

Also on Monday, the company announced it will be issuing a $1-per-share dividend, payable Aug. 26 to shareholders of record on Aug. 12.

Wynn shares rose by 80 cents to $132.78 in afternoon trading.

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