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The Chinese enclave of Macau is the only destination that matters to casino companies today as market growth continues to exceed expectations.
Wynn Resorts Ltd., the casino company controlled by billionaire Steve Wynn, reported fourth- quarter earnings that beat analysts’ estimates as revenue in Macau surged. The shares rose in extended trading.
Profit increased to $2.27 a share, excluding items, compared with the $1.75 average of 22 analysts’ estimates compiled by Bloomberg. Revenue gained 18 percent to $1.52 billion, the Las Vegas-based company said in a statement yesterday. Analysts on average had projected $1.44 billion.
“Results were primarily driven by strong mass market revenues in Macau, which we view favorably, given that it is a more stable and higher-margin business,” said John Kempf, an RBC Capital Markets LLC analyst, in a research note.
Sales in Macau, Wynn Resorts’ biggest market, rose 25 percent to $1.12 billion in the quarter. Gambling industry revenue in the enclave, the only part of China where casinos are legal, increased 24 percent in the quarter to $12.5 billion, according to the Gaming Inspection and Coordination Bureau there.
The company’s Las Vegas business posted a 2.4 percent gain in revenue to $400 million. It benefited from higher room rates and an increase in convention business, Wynn said on a conference call yesterday. Results in that market in 2014 would be equal or better, he said.
Net income rose to $213.9 million, or $2.10 a share, from $111.4 million, or $1.10, a year earlier.
“The numbers speak for themselves,” Wynn, 72, said. “For two hotels to have cash flow of $1.8 billion and change is very satisfying.”
Las Vegas Sands Corp., the world’s largest casino company, reported Jan. 29 that revenue in Macau climbed 28 percent to $2.53 billion in the fourth quarter and sales in Las Vegas rose 25 percent to $385.7 million.
Wynn Resorts is building a $4 billion resort on the Cotai Strip, the Asian equivalent of the Las Vegas Strip. The resort will open in January 2016, Wynn said. The company will complete a second phase of the project two years later that could bring total spending there to $9 billion, he said.
It will add another 1,500 hotel rooms, all of which will be suites with massage rooms and 80-inch television sets, Wynn said.
Wynn Resorts’ shares climbed 4.2 percent to $210 in extended trading yesterday after the company disclosed its results. They closed up 3.9 percent to $201.51 in New York. The stock has gained 63 percent in the past 12 months, compared with 19 percent for the Standard & Poor’s 500 Index.
Editors: Ben Livesey and Stephen West.
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