July 29 (Bloomberg) -- Wynn Resorts Ltd., the casino company run by Steve Wynn, reported profit that trailed analysts’ estimates amid a slowing of Macau revenue and ongoing hotel renovations by the company there.
Excluding items, profit totaled $1.51 a share, Las Vegas-based Wynn said today in a statement. Analysts had projected $1.57 a share, the average of 23 estimates compiled by Bloomberg.
Wynn, which began a renovation of about 600 guest rooms in its Wynn Macau tower last quarter, said the number of available room nights fell 5 percent as a result during the period. Property Ebitda -- earnings before interest, taxes, depreciation and amortization -- in Macau fell 4 percent.
“Overall, the results in Macau were below our fairly low expectations,” wrote Joseph Greff, an analyst with JPMorgan Chase & Co., in an investor note today. “Ebitda margins were 210 basis points below our estimate, reflective of a tough June on the mass table side and, to some degree, room renovation disruption,” wrote Greff, who rates the shares the equivalent of buy.
Sales in Macau increased 2.6 percent during the second quarter, while revenue from Las Vegas operations jumped 16 percent, the company said. In the first three months of the year, revenue in Macau had risen 4.4 percent, compared with a 6.6 percent increase in Las Vegas.
Shares of casinos with operations in Macau have fallen in the past two months as investors focused on economic warning signals from China. Betting receipts in Macau are expected to see a “visible” slowdown in the second half of 2013 as high-stakes players contribute a smaller share of casino revenue, the city’s Monetary Authority said July 17.
Macau’s casino revenue rose 15.8 percent in the second quarter to $10.8 billion, with the strength coming from both the mass market and the VIP segments.
Wynn’s second-quarter Ebitda in Macau was $290.1 million, compared with $302.2 million a year earlier. Ebitda excluding some items in Las Vegas jumped 66 percent to $135.7 million during the period.
Net income fell 6 percent to $129.8 million, or $1.28 a share, from $138.1 million, or $1.37, a year earlier. The results this year included a $26.6 million loss for the early retirement of debt, the casino operator said.
Total revenue increased 6.3 percent to $1.33 billion. Analysts had estimated $1.34 billion on average.
Wynn shares gained less than 1 percent to $131.27 at the close in New York. The stock has advanced 17 percent this year.
Last week, Las Vegas Sands Corp. posted quarterly results that missed analysts’ estimates after winnings in Singapore and Macau came in lower than projected.
Wynn has negotiated a final price of $4 billion for the new casino it is building on the Cotai Strip in Macau, Chief Executive Officer Steve Wynn said today on a conference call. The building, called the Wynn Palace, will open in early 2016 and will feature floral sculptures the size of “floats of the Rose Bowl Parade,” he said. The company has also begun discussions with the government of Macau about renewing its casino concession there, Wynn said.
Wynn also said a casino hotel he has proposed building in Philadelphia would cost $900 million and generate as much as $175 million in profit. A proposed Boston-area casino would cost $550 million.
The projects, part of a plan called “Urban Wynn,” will succeed the era of grand hotels such as the Waldorf-Astoria in New York, which can’t be built anymore due to construction costs and the hotel-room pricing pressure from online booking providers, Wynn said. The addition of a casino makes such construction economical, he said.
“We can build what I call a grand hotel and then if you are a person that wants to gamble, you go down the hall,” he said.
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