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Wynn Resorts Q4 profit almost halves as Macau revenue tumbles

Wynn Resorts has fallen victim to Macau’s downturn with the company’s fourth-quarter profit plummeting as a result of its Macau operations underperforming.

The company’s revenue fell to $1.13 billion, dragged down by a 32 percent decline in the Macau operations and 5.8 percent drop in Las Vegas.

Net income was $109.3 million, or $1.07 per diluted share, halving from $213.9 million, or $2.10 per diluted share, in the fourth quarter of 2013. On an adjusted basis, net income was $122.4 million, or $1.20 per diluted share, compared to $231.2 million, or $2.27 per diluted share a year earlier.

Wynn Macau reported revenue of $761.2 million, down from $1,119.9 million a year earlier. Table games turnover in the VIP segment was $20.7 billion for the fourth quarter of 2014, a 39.9 percent drop. Table games win in the mass market segment decreased by 15.0 percent to $249.0 million.

In an earnings call, CEO Steve Wynn said the numbers were unsurprising and that the last three months of last year were “tough.”

“Our business for the year looked great, but the fourth quarter was tough, since golden week in October. The effects of the changes in China have had a negative effect on all of the top end business, whether that means retail top-end like Rolex and Louis Vuitton or whether we’re talking about the high-end gaming in junkets and the VIP sections,” Wynn said.

David Bain, managing director of Sterne Agee & Leach Equity Research said Wynn’s fourth quarter results were as expected and now “out of the way.”

“Wynn commentary was in line with [Las Vegas Sands] and what we expect from other Macau operators still to report: Low near-term visibility sprinkled with longer-term conviction,” Bain said.

Wynn’s troubles come amid a weakening mainland economy and efforts by the Chinese government to curb graft, which have affected the Macau gaming industry.

Macau’s year-on-year gross gaming revenue fell 17 percent last month to $2.97 billion.

Still Wynn said it expects to open its new Cotai property in the first half of 2016. The total project budget, including construction costs, capitalized interest, pre-opening expenses, land costs and financing fees, is approximately $4.1 billion. During the fourth quarter of 2014, Wynn invested approximately $428.7 million in the Cotai project, taking the total investment to date to $1.8 billion.


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