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MGM Resorts' quarterly loss widens, China growth slows
LOS ANGELES |
LOS ANGELES (Reuters) - Casino operator MGM Resorts International (MGM.N) reported a wider fourth-quarter loss on impairment charges on Wednesday, and as growth in its Chinese unit slowed from red-hot levels of a year ago.
MGM Resorts, which operates the Mirage and Bellagio casino resorts, said revenue fell marginally to $2.29 billion. Analysts on average had expected $2.31 billion, according to Thomson Reuters I/B/E/S.
Its Chinese unit, MGM China Holdings Ltd (2282.HK), set a special dividend of $500 million. MGM Resorts owns a 51 percent stake in the Chinese venture.
On a conference call with analysts, MGM Resorts Chief Executive Jim Murren said he expects the unit to pay additional distributions.
"I expect MGM China will be able to continue to pay distributions to shareholders while investing in its second property in Cotai (in Macau). In fact, we have a board meeting next week where we will discuss putting in place a formal dividend policy," Murren said.
MGM Resorts said its $255 million share of the dividend would be used to further improve its balance sheet.
Revenue from MGM China, which accounts for about 32 percent of MGM Resorts' overall business, rose 2 percent in the fourth quarter, down from the 26 percent growth a year earlier.
Slowing economic growth in China, tighter scrutiny of money transfers and the government's actions to combat corruption have dampened gambling sentiment.
JP Morgan analyst Joseph Greff said the Macau results were in line with his expectations. "For us, the big takeaway here is that MGM is executing on controlling operating expenses in Las Vegas."
MGM Resorts' net loss widened to $1.22 billion, or $2.50 per share, in the quarter that ended December 31, from a loss of $113.6 million, or 23 cents per share, a year earlier.
Excluding items, the company reported a loss of 23 cents per share, compared with analysts' expectations of a loss of 22 cents per share.
Deutsche Bank analyst Carlo Santarelli said the company beat his estimates.
"Net-net, we find the results to be better than expected, into relatively low expectations. That said, we believe follow-through on margin strength in the fourth quarter will go a long way toward determining the trajectory of the stock as we move through 2013 post the recent run in shares."
Shares of MGM Resorts fell 1.6 percent to close at $12.54 on Wednesday.
The debt-laden casino operator said refinancing a $5 billion credit facility in December led to a loss of $505 million in the fourth quarter.
On the call, Murren said the refinancing and other trends put the company on a path toward growth in 2013.
The company also took a $600 million impairment charge related to the sale of land in Las Vegas and Atlantic City and from its investment in the Borgata Casino Resort in New Jersey.
Murren said MGM Resorts has been approached by potential buyers for the Crystals luxury mall in its $8.5 billion Las Vegas CityCenter joint venture complex.
(Reporting by Siddharth Cavale in Bangalore and Susan Zeidler in Los Angeles; editing by Don Sebastian, Maureen Bavdek and Matthew Lewis)
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