Macau slump leads to rare quarterly loss for Wynn Resorts

Macau giveth and Macau taketh away for Wynn Resorts.

Long the cash cow for the company over the years, the Chinese enclave’s contribution to the company’s bottom line continued its downward trend leading to a rare first-quarter loss, the company announced Tuesday.

The company reported a loss of $44.6 million, 44 cents a share, on revenue of $1.09 billion, compared with earnings of $226.9 million, $2.22 a share, on revenue of $1.51 billion for the quarter that ended March 31.

The company reacted by reducing its dividend to 50 cents a share. In past quarters, the company paid dividends of $1.50 in February and $2.50 in October.

Wynn said the board “would not hesitate to continue to reduce the dividend” in future quarters.

“The trends in Macau were beginning to be very visible in the fourth quarter,” Chairman and CEO Steve Wynn said in a conference call with investors Tuesday. “Our hopes for a turnaround during Chinese New Year turned out to be incorrect.”

The share price was down as much as 10 percent in extended-hours trading.

Wynn said first-quarter trends are continuing. He said if the company has a flat second quarter he’d be happy — and he doesn’t expect that to happen.

“The degradation of volume that we saw in January, February and March are continuing into April,” he said. “It’s no secret that there has been a change in attitudes in mainland China.”

Wynn was referring to reforms ordered by China’s central government to battle corruption. Wynn said he fears the continued crackdown could lead to social unrest in the months ahead.

The 37.7 percent net revenue decrease from Macau operations were partially offset by a 1.6 percent increase in net revenues from Las Vegas operations.

Wynn said a meaningful economic recovery for the Las Vegas market still hasn’t materialized, although he said he’s seen some occasional spurts, including this coming weekend when the Manny Pacquiao-Floyd Mayweather will increase some room rates to $1,500 a night and bring in a flood of baccarat players.

“I’ve never seen anything like it,” Wynn said of the demand generated by the interest in the boxing match.

In Las Vegas, net revenue was $386.9 million, a 1.6 percent increase from the first quarter of 2014. Net casino revenue was $161.8 million, a 4.2 percent increase from a year ago. The table game drop of $573.6 million was down 11.4 percent in 2014, but the table-game win percentage was 23.7 percent, within normal expectations of 21 percent to 24 percent and above the first quarter of 2014’s 20.7 percent.

Room revenue was down 3.3 percent and occupancy declinded from 87.8 percent to 83 percent.

Food and beverage revenue for the quarter was flat and entertainment and retail improved by 3.4 percent to $55.9 million.

While Wynn is pessimistic about the short term, he continues to be bullish on Macau’s long-term outlook and the company’s opportunity in Massachusetts.

He predicts the new Wynn Palace on the Cotai Strip, due to open in early 2016, will be “the big photo op” for Macau.

And, construction is scheduled to begin in the fall in Everett, outside Boston, for the company’s new venture on 33 acres on the Mystic River.

Contact reporter Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Find @RickVelotta on Twitter.