On Thursday MGM Resorts International said that due to the struggling casino business in Macau and the planned openings in the region of other multi-billion dollar resorts, it would delay the opening of its $3 billion MGM Cotai until the first part of 2017.
According to Asia Gaming Brief, MGM said it would move the opening its MGM Cotai development to the end of the first quarter of 2007 from the further quarter of 2016. No changes to the $3.0 billion budget, which excludes capitalized interest, development fees and land related costs, were reported. MGM also said, related to the company’s Macau holdings, it was taking a $1.5 billion non-cash impairment charge. The charge occurs amidst reduced cash flow forecasts for MGM China’s resorts, lower valuation multiples for gaming assets in Macau’s market, and follows a yearly review of its goodwill carrying values.
Analysts said the delay of the Cotai opening was expected and that overall the results were solid. The company’s profits for the fourth quarter were dragged down by MGM’s Macau operations, overshadowing a strong performance from its operations in the states. Including the goodwill impairment charge of @1.33 per share, the company had a $1.38 per share or $781.4 million loss, compared to a $342.2 ($0.70) million loss in the prior year fourth quarter. The loss would have been $0.05, without the charge, missing the $0.09 profit forecasted by analysts.
Total revenue was $2.37 billion, down from the previous year’s $2.58 billion. Revenue was $2.19 billion, excluding promotional costs, compared with $2.38 billion. Revenue of $2.25 billion was expected by analysts.
Net revenue of $499 million, was earned by the company’s MGM China unit, a decrease of 31 percent compared to the prior year quarter. Adjusted earnings before interest, taxes, depreciation and amortization was $131 million, a decrease of 29 percent, but still more than the consensus for $124 million. VIP volumes were down 57 percent, and mass table revenues saw a decrease of 14 percent.
Meanwhile, despite having an April 2016 completion requirement, the Parisian Macao, also in the Cotai district, has been given an extension by the Macau government to complete construction at a later date. Sands China Ltd, which Sheldon Adelson is the CEO, was given until November to complete the project because the resort is not near completion.