Macau casino operator Wynn Macau Ltd says the Covid-19 crisis “has had and will likely continue to have, an adverse effect” on the group’s business and its “ability to pay dividends”. The spread of the coronavirus and the recent developments surrounding the global pandemic were “currently having negative impacts on all aspects of our business,” the company said in its 2019 annual report filed on Wednesday.
Wynn Macau Ltd runs the Wynn Palace casino resort on Cotai, and the Wynn Macau property (pictured) in downtown Macau. In March, the firm said its board had decided not to recommend a final dividend for calendar year 2019.
The Macau casinos are currently operating – following a 15-day suspension in February – but a succession of travel restrictions by the Macau authorities and other jurisdictions has narrowed market-wide the potential customer base for gaming operations, say a number of investment analysts.
Since the reopening of the market on February 20, the city’s casinos have also been running with limited capacity due to social distancing policies on gaming floors.
U.S.-based Wynn Resorts Ltd – the parent company of Wynn Macau Ltd – said earlier this month that it expected to continue to have “cash costs in excess” of the amounts it is earning at its Macau operations, due to the Covid-19 pandemic and the associated restrictions to travel and tourism. That was despite having “fully restored” its casino operations in Macau on March 20, said the group at the time.
In its annual report, Wynn Macau Ltd stated that even when travel restrictions are lifted, demand for casino resorts “may remain weak for a significant length of time”. The firm said that, depending on business conditions, it might need “to raise additional capital in the future”.
The firm added that it “cannot predict if and when our properties will return to pre-outbreak demand or pricing. In particular, demand for casino resorts may be negatively impacted by adverse changes” either in the way consumers perceived the economic climate or in actual economic conditions.
Brokerage Nomura had said last week it might be 2022 before Macau gross gaming revenue reached 2019 levels.
Wynn Macau Ltd also noted that it could be “adversely impacted” by the negative effect of Covid-19 on the group’s “tenants, travel agencies, suppliers and other vendors”.
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