Wynn Macau reports operating income doubled for second quarter

PUBLISHED : Saturday, 12 July, 2008, 12:00am
UPDATED : Saturday, 12 July, 2008, 12:00am

Billionaire casino developer Steve Wynn's Wynn Resorts reported blowout results from its US$1.2 billion Macau property for the second quarter, helping to offset sharp declines in its native Las Vegas market.

Record volumes on the high-stakes baccarat tables pushed operating income at the Wynn Macau up as much as 99 per cent from a year earlier and 32 per cent from the previous quarter to a record US$100 million-US$106 million during the three months to June, the Nasdaq-listed company said in a preliminary earnings release after the market closed on Thursday.

Profit from the 600-room Macau property was nearly five times the expected US$18 million-US$22 million booked at the company's 2,700-room flagship casino resort in Las Vegas, where earnings declined by as much as 72 per cent as a result of the slumping United States economy.

The sharp contrast between Wynn's bumper Macau performance and sluggish Las Vegas figures is likely to stoke interest among local investors, following Thursday's report in the South China Morning Post that Wynn is considering a secondary listing on the Hong Kong stock market that could attempt to raise as much as US$3 billion.

Wynn issued the preliminary earnings release - its first since listing in 2002 - after shares in the firm fell 9.82 per cent to close at a 20-month low of US$69.94 each. They are down 37.6 per cent in the year to date.

At the same time, the company said it would raise the budget for its US$1.2 billion share repurchase programme by another US$500 million.

Between the programme's launch in June last year and March, Wynn repurchased US$423.5 million of its own stock at an average cost of US$97.25 per share. During the same period the company raised US$681.29 million by selling new shares at US$158 per share in an open-market placement last September.

Wynn shares surged as much as 15 per cent in after-market trading following yesterday's announcements.

Wynn Macau's earnings before interest, tax, depreciation and amortization (ebitda) rose as much as 68 per cent from a year earlier and 22 per cent from the previous quarter to between US$152 million and US$158 million.

Sales of VIP gambling chips to baccarat players in Macau surged 75 per cent from a year earlier to US$16.3 billion - the property's best quarter ever despite cutthroat competition for high rollers among Macau's six licensed casino operators.

Wynn won back a steady 2.96 per cent of VIP chips sales, within the expected range of 2.7 to 3 per cent, for gross VIP winnings of US$482.48 million before tax and junket commissions.

Mass market or public casino tables' drop - a proxy measure for total wagering volumes - rose 24.7 per cent from a year earlier to US$626.9 million, another quarterly record, following an expansion to the casino floor that opened in December last year.

Wynn is currently building a US$600 million, 400-room hotel tower called Encore that will be attached to the existing Wynn Macau and feature more casino space, shops and restaurants when it opens in the first half of 2010.

Mr Wynn told investors in May that the company hoped to break ground before the end of next year on an additional 52-acre plot of reclaimed land on Cotai, where he was planning a mega-resort with 1,500 to 1,800 rooms.

Wynn will announce its full and finalised results for the quarter on July 24.