GGRAsia – MGM China interim net loss widens to US$306mln

MGM China interim net loss widens to US$306mln

Aug 05, 2022 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator MGM China Holdings Ltd’s interim loss attributable to its owners reached HKD2.40 billion (US$306.3 million) for the six months ended June 30, up from HKD1.73 billion in the prior-year period.

The deterioration was linked to the “continuing adverse impacts of the global Covid-19 pandemic including outbreaks of Covid-19 cases in Macau and neighbouring regions including mainland China”, said MGM China in a filing to the Hong Kong bourse on Thursday.

The second-quarter results filed by its parent MGM Resorts International in the United States on Wednesday, had not specified the MGM China interim loss attributable to shareholders.

In Macau, Covid-19 -related travel restrictions had wrought “significant impact” on visitor volume “to MGM Macau and MGM Cotai, and caused a significant adverse effect on the group’s results for the six months ended June 30, 2022”, MGM China said.

A community outbreak of Covid-19, which started on June 18 and took more than a month for the authorities to bring under control, saw a 12-day shutdown in July of the city’s casinos as a precaution.

MGM China said it had been cutting costs, including “reducing or deferring… certain capital expenditures” that otherwise would have made in the first half, and had been “reducing payroll expenses”.

Steps toward the latter had included “limiting staff on-site, implementing a hiring freeze and organisational change, and introducing voluntary unpaid leave during the Covid-19 pandemic, while preserving local jobs in response to requests of the Macau government,” MGM China stated.

MGM China saw its staff costs decrease by only 1.5 percent year-on-year, to HKD1.54-billion for the first six months of this year. Such costs, which were the biggest operating expense item, represented about 32.5 percent of the firm’s aggregate operating costs and expenses, at HKD4.74 billion in the interim period.

The firm’s casino revenue for the first half of this year was HKD2.75 billion, representing a decline of 33.4 percent, from HKD4.13 billion in the prior-year period.

As at June 30 this year, the firm did not have any revenue-sharing arrangements with any gaming promoters, the filing stated, in a reference to third-party VIP junkets that used to be a major part of the Macau casino sector.

“Driven by the premium mass market and cessation of VIP operations with our revenue-sharing gaming promoters, our proportion of GGR [gross gaming revenue] from the mass and VIP market was 89 percent and 11 percent, respectively, for the six months ended June 30, 2022, compared to 78 percent and 22 percent for the six months ended June 30, 2021, respectively,” stated MGM China.

The casino operator said it continued to reallocate gaming tables from the VIP segment, to its mass gaming floors, in order to maximise yield: subject to the approval of the city’s casino regulator.

Hubert Wang, president and chief operating officer of MGM China, said on the parent’s quarterly earnings call, that the MGM brand’s experience in non-gaming as well as gaming in international markets should help MGM China in its effort to secure a new 10-year concession under a public tender that started on July 29.