Wynn Macau says it is losing more than US$2 million a day amid casino closures
- Wynn Resorts records net loss of US$72.9 million for fourth quarter
- Casinos will close for 15 days to contain the spread of the coronavirus after a hotel worker was infected locally
Wynn Macau, one of Macau’s six gaming concessionaires, said the closure of the special administrative region’s casinos was costing it between US$2.4 million and US$2.6 million a day, most of it towards maintaining more than 12,000 staff.
The two hotels under the company, Wynn Peninsula and Wynn Palace (Cotai), as well as a couple of restaurants were open for the “few remaining guests” in Macau, Matt Maddox, the chief executive of Wynn Resorts, which operates these hotels along with Wynn Las Vegas and Wynn Boston Harbour, said in a fourth quarter earnings conference call on Friday.
The casinos will close for 15 days to contain the spread of the deadly coronavirus after a hotel worker was infected locally, Ho Iat-seng, Macau’s leader, said on Tuesday. In a note published just after this announcement, investment research and institutional asset management company Sanford C. Bernstein said the news around the coronavirus and Macau gaming would get bleaker before it got any better, with stocks likely to be under pressure in the short term.
In a sign of near-term challenges the casino operators face, Melco Resorts said on Friday it was stopping a planned share purchase of Australian gaming and entertainment group Crown Resorts, which would have doubled its shareholding. Melco said, in light of the shutdown, it would “reassess all noncore investments to be made in 2020”.
Wynn Macau said it recorded a 11.7 per cent year-on-year decline in adjusted property Ebitda to US$348 million in the fourth quarter. The adjusted property Ebitda fell 12.6 per cent for 2019, from US$1.58 billion to US$1.4 billion. Meanwhile, the casino revenues from Wynn Macau and Wynn Palace fell 15.2 per cent in the fourth quarter of 2019, compared with 2018. The net profit for the quarter fell 2.1 per cent.
Wynn Resorts recorded a net loss of US$72.9 million for the fourth quarter, down from a net profit of US$464.9 million in the fourth quarter in 2018.
The Macau properties accounted for more than 67 per cent of Wynn Resorts’ total operating revenue in the fourth quarter. Wynn Palace recorded a 20 per cent drop in revenue in the quarter, to US$590 million, while Wynn Macau reported a 5.1 per cent decline to US$524 million.
Wynn Macau has US$2.36 billion in cash and cash equivalents, which Craig Billings, Wynn Resorts’ chief financial officer, said should be a sufficient buffer against the affects of the closure. During the conference call, management for Wynn Resorts said they did not expect any payout from business interruption insurance.
And although Maddox, the Wynn Resorts CEO, declined to say when the casino closure will end, he felt that the coronavirus was “fairly well contained” in Macau. Given the new investment going into the tourism industry in Macau, Maddox struck a positive note for the second half of 2020, saying that Macau was set for a rebound.
“Tourism is one of the first things that rebounds in events like this, because people want to get out and move around and get back to normal,” he said.
However, in a research note on Friday, US financial services company Jefferies Group maintained a hold rating for Wynn Macau. “Although management is positive on long-term outlook, we sense near-term reopening uncertainty,” it said.
