Wynn Resorts Ltd.’s fourth-quarter profit slipped due to higher tax expenses and weaker revenue from China, but the casino operator managed to beat Wall Street’s revenue forecast.
The company, led by billionaire casino impresario Steve Wynn, is running counter to industry trends. Its business in the U.S. is improving, while its growth in the Asian gambling hub of Macau is slowing.
Meanwhile, its competitors are doing so well overseas that they are shifting the bulk of their focus to China. Las Vegas Sands Corp. reported Wednesday that its net income jumped 35 percent, fueled by revenue growth in Macau, the largest gambling market in the world and the only place where gambling is legal in China.
Steve Wynn downplayed the slowdown in Macau on a conference call with analysts and investors.
“Our market share in terms of the top line, the gross revenue that gets so much attention on Wall Street, has been a story of irregular progress onward and upward. That has never changed in my career and I don’t think it is likely to change when you are in a business that involves great capital projects that take three to five years to develop and open,” he said.
“We don’t focus very much on the top line because so much of it is noise,” he added.
Wynn expects to begin construction on a new property in Macau’s Cotai district the day after Chinese New Year, and to open the casino within three years.
He touted the company’s successes in Las Vegas, and said the company is reaping the rewards of building luxury hotel-resorts instead of “slots in a box.”
In Las Vegas, the company said convention business is tracking above plan in rates and room nights, and sees the same kind of strength going on into 2014.
Wynn reported after the stock market closed Thursday that it earned $111.4 million, or $1.10 per share, for the quarter that ended Dec. 31. That is down from $190.5 million, or $1.52 per share, in the same quarter of the prior year. The company was weighed down by a $47.9 million jump in tax expenses due to the timing of dividend payments from Macau and other items. After adjusting for this, it earned $1.17 per share versus $1.55 per share.
Its total revenue fell to $1.29 billion from $1.34 billion. This was driven by a nearly 10 percent decline in Macau operations that was partially offset by a 12 percent increase in revenue from its Las Vegas operations.
Analysts polled by FactSet were expecting Wynn to earn $1.25 per share on revenue of $1.27 billion.
The company, based in Las Vegas, runs Wynn Las Vegas and Encore at Wynn Las Vegas. It also operates the Wynn Macau casino resort and Encore at Wynn Macau resort in China.
Its shares slipped 83 cents to $124.39 in after-hours trading following the release of the earnings report. The stock closed the regular session up $1.73 at $125.22.
Wynn said he was positioning the company to take advantage of the gambling boom in Macau over the long run, and to cash in on upscale “Urban Wynn” properties in cities like Philadelphia and Boston.
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