Macau-based casino operator MGM China Holdings Ltd reported operating income for the first three months of 2016 of US$47.5 million, down by 34.4 percent in year-on-year terms.
The figure was included in a Thursday filing from the parent company, MGM Resorts International, to the New York Stock Exchange.
In the first quarter of 2016, MGM China recorded total net revenue of US$469.0 million, a decrease of 25.6 percent compared to the prior-year quarter.
Adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) were US$114.1 million, down 23.1 percent compared to the prior-year period. The figure was below the forecasts of several analysts.
Adjusted EBITDA margin for the quarter grew 77 basis points year-on-year to 24 percent as “a result of an increase in main floor table games mix and continuous efforts to reduce costs,” according to the statement from MGM Resorts.
MGM China’s only casino in operation – MGM Macau (pictured) – had a total of 256 mass-market gaming tables during the first quarter of 2016, a year-on-year increase of 8.5 percent. The number of VIP tables declined by 12.2 percent during the same period to 165.
VIP table games revenue at MGM Macau decreased 41 percent year-on-year in the first three months of 2016. According to MGM China’s parent, the decline was “due to a decrease in turnover of 34 percent compared to the prior-year quarter, and hold percentage decreased to 3.0 percent in the current year quarter, compared to 3.3 percent in the prior year quarter.”
Main floor table games revenue decreased 8 percent in the first three months of 2016 compared to the prior year quarter .
Mass-segment casino gross gaming revenue (GGR) market wide in Macau – including mass table games, slots and live multi game, a category of electronic table game using a live dealer – fell 4.8 percent year-on-year in the first quarter this year. VIP baccarat GGR market wide also showed a slowing in the rate of decline for the segment – 19.3 percent – albeit from a depleted base, show data from the city’s gaming regulator released last month.
“While we have seen some revenue volatility we have been driving improvement in our operating margins, as our cost management and business re-engineering efforts continue to deliver; as well as [additionally] more of our revenue is generated from the mass segment,” MGM China stated in a Thursday release.
The firm added: “We are monitoring the market and are encouraged by the trends in the mass space.”
MGM China also confirmed the opening of its under construction new resort on Cotai (pictured) was now scheduled for the first quarter of 2017, as announced last February . MGM Cotai was previously slated for a fourth quarter 2016 launch.
However, in a conference call with investment analysts following the MGM Resorts announcement, management admitted that the MGM Cotai opening could be delayed slightly beyond the end of the first quarter of 2017.
“We are excited to finally see our new resort becoming a reality,” MGM China chief executive Grant Bowie said in a statement. “With the expansion of room base, we intend to continue targeting quality customers who spend longer periods of time at our property.”
Beside gaming, MGM Cotai is to have approximately 1,500 hotel rooms and suites, meeting space, spa and retail offerings, and food and beverage outlets. MGM Macau, in the city’s traditional downtown casino area, has approximately 600 guest rooms and suites.
In the conference call with analysts, Mr Bowie stated that MGM China had experienced a “quite good” May 1 holiday period. “The key issue for us is that we saw some clients come back,” he added. “We are starting to see some traction, with increased volumes.”
During the conference call, Mr Bowie also stated that MGM China was expecting to transfer around 500 gaming operation staff to MGM Cotai once that property opens.
Group wide, MGM Resorts reported net income of US$66.8 million for the first quarter of 2016, a deterioration from the US$169.9 million reported a year earlier. Group revenue for the three months to March 31 was US$2.21 billion, down 5.3 percent from the prior-year quarter.
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