The chairman and chief executive of MGM Resorts International, Jim Murren, announced on Wednesday plans to step down from his position prior to the expiration of his contract, which was due to run until the end of 2021. The announcement coincided with the company’s fourth quarter announcement.
MGM Resorts is the parent company of Macau-based casino operator MGM China Holdings Ltd. The U.S.-based firm also aspires to a Japan casino licence under the ongoing casino legalisation process taking place in that country.
Mr Murren (pictured in a file photo) has served as chairman and CEO of MGM Resorts since 2008 and has been with the company since 1998. He is also the chairperson of MGM China and an executive director of that firm.
MGM Resorts stated in a press release that Mr Murren would “continue to serve in his current leadership roles until a successor is appointed”. The firm added its board already had formed a committee of independent directors to conduct the search process for a replacement.
The release quoted Mr Murren as saying: “We have a solid leadership team in place, and I am confident that they will work with my successor to continue the company’s trajectory of growth and expansion.”
He added: “Until my successor is named, I will continue to lead this company just as I always have and will remain focused on executing our strategy and am fully committed to supporting a seamless transition.”
Brokerage Sanford C. Bernstein Ltd said in a note following Mr Murren’s announcement that his decision to step down meant “no changes” to senior management at MGM China. Mr Murren’s departure “should not impact Macau operations,” added analysts Vitaly Umansky, Kelsey Zhu and Eunice Lee.
The announcement of Mr Murren stepping down comes as MGM China braces itself for the impact on its Macau operations of a mainland-China originating novel coronavirus infection. In an effort to prevent the spread locally of the infection, the Macau government announced that the city’s casinos would be closing for at least 15 days, starting from February 5.
During a Wednesday conference call with investment analysts to discuss the fourth-quarter results of MGM Resorts, management said the casino closure step in Macau was costing the firm US$1.5 million a day.
Mr Murren stated that while casino operations at MGM Macau and MGM Cotai were suspended, MGM China was still maintaining “some” non-gaming facilities open, to serve any remaining hotel guests.
He added: “During this time, with our casinos closed, we are actively managing our costs and are incurring approximately US$1.5 million of operating expenses per day across both properties, the majority of which is payroll.”
Rival casino operator Wynn Resorts Ltd said on February 6 that the temporary closure of its two casinos in Macau was costing the group between US$2.4 million to US$2.6 million a day.
In comments included in a filing to the Hong Kong Stock Exchange on Wednesday, MGM China said it was “currently unable to predict the duration of the business disruption in Macau” caused by the coronavirus crisis, including whether the suspension in casino operations would “ultimately be continued beyond the 15-day period”.
The firm added: “We expect the impact could have a material effect on MGM China’s results of operations for the first quarter of 2020 and potentially thereafter.”
It further said: “The extent to which the coronavirus impacts the company’s results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and any additional actions taken to contain it from spreading.”
Brokerage Jefferies Hong Kong Ltd stated that “on longer term, [MGM Resorts] management maintained its optimistic outlook [for the Macau operations], citing strong initial start to 2019 with US$2.5 million/day EBITDA [earnings before interest, taxation, depreciation, amortisation] in early January with Mansion villas over-booked at that time and gaining premium mass market share.”
Results in-line with expectations
MGM China reported fourth quarter net revenues up by 6 percent compared to the prior year quarter, to US$727 million.
It said main floor table games win increased 31 percent in the three months ended December 31 compared to the prior year quarter due to the addition of 25 new-to-market tables at MGM Cotai in 2019 and a 499 basis-point increase in win percentage.
VIP table games win however decreased by 20 percent compared to the prior year quarter primarily as a result of a 33 percent decrease in turnover at MGM Macau.
MGM China’s fourth-quarter adjusted property earnings before interest, taxation, depreciation, amortisation, and restructuring or rent cost (EBITDAR) increased 10 percent to US$185 million compared to US$168 million in the prior year quarter. The current quarter adjusted property EBITDAR margin was 25.5 percent compared to 24.5 percent in the fourth quarter of 2019, “increasing primarily as a result of continued ramp-up of operations at MGM Cotai,” the firm said.
Brokerage Morgan Stanley Asia Ltd said in a note commenting on MGM China’s fourth-quarter results that the firm’s hold-adjusted EBITDA growth of 4 percent quarter-on-quarter was higher than that reported by Sands China Ltd and Wynn Macau Ltd, two rival companies in the Macau market and which have already reported fourth-quarter results. MGM Cotai EBITDA of “HKD640 million (US$82.4 million) (decline of 9 percent quarter-on-quarter) was worse than expectation, while [MGM Macau] EBITDA improved to HKD918 million (up 7 percent quarter-on-quarter),” said analysts Praveen Choudhary and Gareth Leung.
Parent MGM Resorts reported that revenue rose by 4 percent in the fourth quarter to US$3.19 billion, matching analysts’ forecast. The company reported a net income of about US$2 billion for the period.
Oct 22, 2021Starting from the stroke of midnight on October 24 (Sunday), travellers arriving in China’s capital Beijing from Macau are no longer required to undergo a 14-day period of “centralised medical...
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