MGM Resorts International posted second-quarter earnings that beat analysts’ estimates as profit growth in Las Vegas made up for prolonged sluggishness in the Chinese betting enclave of Macau, where a new casino was delayed yet again.
MGM Resorts, the largest casino operator on the Las Vegas Strip, earned 26 cents a share excluding some items in the second quarter, the company said Thursday in a statement. That compared with the 19-cent average of analysts’ estimates compiled by Bloomberg. The $3.1 billion MGM Cotai’s opening was pushed back to the second quarter of next year, at least the third time it’s been postponed.
Investors are divining casino operators’ results for signs of a recovery in Macau, which has been mired in a two-year slump after a government crackdown on corruption and graft that increased scrutiny on lavish spenders. The opening of the MGM Cotai next year, along with Wynn Resorts Ltd.’s $4.2 billion Wynn Palace on Aug. 22 and Las Vegas Sands Corp.’s $2.9 billion Parisian on Sept. 13, are being closely watched for their impact on the industry.
Sales at MGM’s resort in Macau, the world’s largest gambling market, fell 19 percent from a year earlier to $452 million as VIP customers continued shun high-end baccarat play.
The high end of the market could take as long as three years to come back, MGM Chief Executive Officer James Murren said in an interview Thursday. While the increased room supply could result in hotel price discounts, the more important factor will be whether betting by mass-market gamblers increases as a result of the new properties, he said. A 4.5 percent drop in Macau betting last month was smaller than analysts expected.
“We think the market has stabilized and started to improve,” he said.
MGM rose 1.2 percent to $24.08 at 2:06 p.m. in New York. The stock had gained 4.7 percent this year through Wednesday.
- Total sales fell 4.8 percent to $2.27 billion, trailing analysts’ projections of $2.33 billion.
- Las Vegas Strip revenue was little changed from a year earlier, compared with a 2.2 percent drop for all of the operators on the Las Vegas Strip, according to data from Bloomberg Intelligence.
- MGM’s earnings in Las Vegas before interest, taxes, depreciation and amortization jumped 12 percent.
The Borgata, MGM’s casino in Atlantic City, New Jersey, should pick up market share from the Trump Taj Mahal, which said yesterday it would close after Labor Day, according to Murren. MGM may hire dealers from the property to work at its new Maryland casino opening later this year, he said.
Caesars Entertainment Corp.’s recent deal to sell its interactive gaming business for $4.4 billion was a “great success,” Murren said, adding MGM has its own social gaming business generating $20 million a year in profit.
(Updates with CEO comments in fifth paragraph.)
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