Casino operator Wynn Macau Ltd saw its quarterly net loss widen to US$270.6 million in the three months to June 30. That compared with respective net losses of US$188.5 million in the previous quarter, and US$116.6 million in the second quarter of 2021.
The latest net loss was on operating revenues that fell by 74.2 percent year-on-year to US$117.2 million during the reporting period. Wynn Macau Ltd had posted operating revenue of US$298.4 million in the first three months of 2022.
The information was disclosed by Wynn Macau Ltd in a filing to the Hong Kong Stock Exchange on Wednesday morning. Its parent, United States-based Wynn Resorts Ltd, had issued its own set of second-quarter results overnight.
Adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) at Wynn Macau Ltd were a negative US$90.3 million for the second quarter, compared to a positive US$67.6 million in the prior-year period.
Casinos in Macau continued to operate in the second quarter in a low-revenue environment amid Covid-19 alerts and outbreaks either in Macau or mainland China. Since the onset of the pandemic, mainland China has been the only place to have a largely-quarantine free travel arrangement with Macau.
A community outbreak of Covid-19 in Macau, 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.
In a conference call with investment analysts following the second-quarter results announcement, Craig Billings, chief executive of Wynn Macau Ltd and its parent Wynn Resorts, said the Macau unit had been able to keep costs under control so far in the third quarter, despite the lack of revenue during the period of casino closure ordered by the government in July.
Mr Billings stated: “On a normalised basis, our EBITDA loss was US$900,000 per day in the second quarter. Despite the nearly two-week market-wide casino closure in July, our EBITDA loss has been comparable, at approximately US$1 million per day, quarter-to-date in the third quarter.”
He added: “Our team has done a fantastic job controlling costs in a very challenging operating environment, through a combination of decreases in payroll and fixed operating expenses.”
Wynn Macau Ltd runs the Wynn Macau gaming resort on the city’s peninsula, and Wynn Palace (pictured), in the Cotai district.
Parent Wynn Resorts reported operating revenues of US$908.8 million for the second quarter of 2022, a decrease of US$81.3 million in year-on-year terms. Its net loss stood at US$130.1 million for the period, compared to a net loss of US$131.4 million a year earlier.
Hong Kong-listed Wynn Macau Ltd reports under International Financial Reporting Standards. Its parent Wynn Resorts reports under Generally-Accepted Accounting Principles.
JP Morgan Securities (Asia Pacific) Ltd said in a note commenting on Wynn Macau Ltd’s second-quarter results that “despite dismal EBITDA, there was very little to read [from it]… given the mobility curbs and recent Covid-19 resurgence” impacting Macau and mainland China.
Andrew Lee, of Jefferies Hong Kong Ltd, shared a similar view. He said in a note issued following Wynn Macau Ltd’s results announcement, that the three months to September 30 would “likely be another difficult quarter” for the firm.
He added: “Macau is at the bottom with gaming revenue currently driven by local players only, and we expect tourists to continue to avoid Macau in the near term. October’s Golden Week holiday will be key, but this depends on Covid-19 cases.” That was a reference to a holiday season in mainland China encompassing the country’s National Day on October 1: in pre-pandemic times, the season was a peak period for Macau’s casino and tourism industries.
Diversification doesn’t happen overnight
During the conference call with investment analysts, Mr Billings confirmed that the Wynn group was currently working on a bid for the public tender for fresh Macau gaming rights. The tender is accepting bids until September 14, 2022.
One of the requirements set by the tender is for Macau’s next generation of casino concessionaires to meet the Macau government’s expectations on bringing in more foreign tourists and diversifying the offer of non-gaming products.
Commenting on that particular requirement, Mr Billings noted that “diversifying the market, both in terms of the geographic origin of visitors and their motivations to visit, is not a process that happens overnight.”
He added: “In Las Vegas, it took many years, and it was a concerted effort by both government and business.”
Also attending the conference call, Wynn Macau Ltd’s president, Ian Coughlan, stated that it seemed “the government’s intent is clearly before the end of the year to announce the successful operators” regarding fresh Macau casino rights.
