Macau Shaves Wynn Resorts Profits In 2015, As Las Vegas Continues to Pull Its Weight
Posted on: January 19, 2016, 08:36h.
Last updated on: January 19, 2016, 08:38h.
Wynn Resorts has said that the economic squeeze in Macau hit hard in 2015, and that Q4 net revenue from its operations in the Chinese gambling hub could be halved from the same period in 2014.
Despite this, a rosier outlook in Las Vegas has seen the casino giant’s shares rally.
On Friday, Wynn reported that net revenue in Macau was likely to be down as much as 35 percent for the whole year in 2016, with projections of between $2.45 billion and $2.46 billion, down from $3.79 billion.
Operating income expectations, meanwhile, have been halved, from $895.2 million in 2014 to between $382 million and $390 million.
Macau’s financial debacles kicked in as far back as late 2014, as an anti-corruption drive initiated by the government in Beijing tightened financial controls and put the squeeze on the VIP junket industry that once accounted for 60 percent of the enclave’s gaming revenues.
The gaming region was prepared to feel the pinch, but no one was really prepared for the scale of the downturn, which has produced 19 consecutive months of year-on-year decline, fueled further by the slowing of the Chinese economy and the country’s massive stock falls.
Wynn is scheduled to open its new venture, the Wynn Palace Macau, in March.
The $4.1 billion mega-resort on the Cotai Strip, with its 15,000 hotel rooms, massive eight-acre performance lake, and gondolas shaped like fire-breathing dragons, was conceived in more prosperous times, when Macau was an unprecedented success story.
But lately Steve Wynn has been railing at the road blocks erected by the Macau authorities, and specifically their refusal to reveal how many table games they will allocate for the property.
Its set up for 500, which is the amount Wynn wants so he can see a return on his billions worth of investment dollars.
But under pressure from Beijing, which wants to see more non-gaming attractions in the gambling hub, the government in Macau has been somewhat stingy with its allocations recently.
“The reason these extraordinary non-gaming attractions exist is because the damn casino is the cash register,” he thundered in October. “We’re telling people to come to Macau, but they can’t gamble.”
Up in Vegas
The company’s fortunes are more promising in Las Vegas, however. Although net revenue is expected to be down marginally on the previous year, revenue from Q4 will likely be up in comparison with the previous year, from $376.8 million to between $387 million and $395 million.
Operating income is also expected to increase from $51.6 million in Q4 2014 to between $56 million and $64 million.
After an abysmal 2015, Wynn’s stock has rebounded in recent weeks, not least due to the casino mogul’s bullish decision to buy up one million of his own company’s shares at a cost of around $63.9 million.
Despite its recent struggles, many analysts see the company as a strong proposition for long-term investors. Financial shares rose by 13.34 per cent at the end of trading on Friday, in the wake of the company’s latest revenue projection update.
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