GGRAsia – Melco Crown’s 2Q profit drops 20.7 pct

Melco Crown’s 2Q profit drops 20.7 pct

Aug 07, 2014 Newsdesk Latest News, Macau, Top of the deck

Macau-based casino operator Melco Crown Entertainment Ltd reported net income for the second quarter of 2014 of US$143.6 million, or US$0.26 per share, down 20.7 percent from a year earlier. The casino developer had posted a net profit of US$181.0 million, or US$0.33 per share, in the second quarter of 2013.

Analysts polled by Thomson Reuters expected the company to report earnings of US$0.36 per share for the quarter.

Revenue in the three months to June 30 was US$1.2 billion, representing a decrease of about 7 percent year-on-year, the company said in a filing on Thursday.

“The decline in net revenue was primarily attributable to lower group-wide rolling chip revenues, partially offset by improved mass market table games revenues,” Melco Crown said.

Lawrence Ho Yau Lung, Melco Crown’s co-chairman and chief executive, said the mass market was responsible for driving the company’s profitability in the period.

“We expanded our market share in the mass table game [segment] during the second quarter of this year, a trend we expect to continue,” Mr Ho said during a conference call with analysts.

Melco Crown is a venture between Mr Ho and Australian billionaire James Packer, chairman of casino operator Crown Resorts Ltd.

Adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) came at US$313.6 million for the second quarter of 2014, down by 11 percent from US$350.8 million a year earlier.

The company announced a quarterly dividend of US$0.0259 per share to be paid on September 4.

“In the second quarter of 2014 we delivered solid underlying financial performance, driven primarily by our mass-market table games business at City of Dreams where revenue increased approximately 38 percent on a year-over-year basis,” Mr Ho said.

Studio City, the company’s second large-scale resort in Cotai, remains on track to open in mid-2015, Mr Ho said. City of Dreams Manila, a partnership with Philippine-based Belle Corp, is scheduled to open “in the fourth quarter of this year,” he added. The company is also building a fifth hotel tower at its City of Dreams casino resort in Cotai, scheduled to open in the first half of 2017.

Mr Ho said the company has all the permits needed for each step of the construction of Studio City, as some reports suggested a backlog in construction permits for Cotai.

“There is plenty of development in Macau and the government is trying very hard to clear that. For us, we don’t have any outstanding permit that we require from a construction standpoint,” Melco Crown’s CEO said.

Table allocation, Taiwan probe

During the conference call, Mr Ho also talked about the gaming table allocation for the Studio City project.

He said Melco Crown is “very confident it will get its fair share of tables” for the new project.

Studio City “can accommodate 500 tables,” Mr Ho said, adding that he was not sure the company would get that number of tables from the government. “We hope to get 400 tables or more,” he said on the conference call.

In Thursday’s filing, the casino operator announced that the Taipei District Prosecutors Office has indicted its Taiwan branch office and some of its employees, “for alleged violations of certain local banking and foreign exchange legislation”. As of Thursday evening, the company said it had not received the formal indictment document.

The Taiwan offices of MCE International Ltd, a unit of Melco Crown, were being investigated last year by public prosecutors on the island on suspicion of illegal transfer of US$179 million in gamblers’ cash between Taiwan and Macau.

“We will defend vigorously any indictment brought against us,” Mr Ho said, adding the company believes its Taiwan operations are in compliance with local laws. He did not comment more on the case.

Melco Crown said it doesn’t believe the indictment will have any material impact on its financial position.

On Thursday, the company also announced that the board approved a US$500 million stock repurchase programme.

“We believe this capital management strategy provides us with the mechanism to return surplus capital opportunistically and efficiently, while maintaining flexibility to fund our current operations and future development pipeline,” Mr Ho said.

The buyback allowance will expire at the company’s 2015 annual general meeting. The management said it would make use of the programme “opportunistically”.