MGM Resorts posts 2Q profit, aided by MGM China
Tuesday, August 9, 2011
NEW YORK (AP) — Casino operator MGM Resorts International said Monday it swung to a profit in the second quarter as the company benefited from taking a controlling stake in its China venture. The company’s adjusted net loss was narrower than analysts expected as both gambling and hotel room revenue increased.
The positive results, which came after the market closed, were largely overshadowed on a day when the stock market swooned as anxiety overtook investors on the first trading day since Standard & Poor’s downgraded American debt. The Dow Jones industrials fell 634.76 points, the worst one-day drop since December 2008.
MGM shares fell 24 cents, or 2.1 percent, to $11.30 in aftermarket trading, after closing the day down nearly 9 percent at $11.54.
Still, MGM’s results mark the first two consecutive sequential quarters of operational improvement since the downturn, said CEO Jim Murren in a call with investors.
“This, combined with very positive forward trends that we are currently seeing, leads us to believe that the signs of the recovery” in Las Vegas are consistent, he said. “We are going to see continued improvement as we move into the back half of this year and into 2012.”
Net income totaled $3.44 billion, or $6.22 per share during the three months ended June 30. That compares with a net loss of $883.5 million, or $2 per share last year, which included a charge of $1.12 billion for impairment of the company’s investment in the CityCenter joint venture.
The latest results benefited from a hefty $3.5 billion gain, or $6.30 per share, related to acquiring a controlling interest in MGM China Holdings Ltd.
MGM China Holdings Ltd. operates a profitable casino in Macau, which is the only place in China where casino gambling is legal. MGM took a controlling 51 percent stake in MGM China Holdings when it went public on the Hong Kong stock exchange in June. Before that it had a 50 percent stake.
That move is “an important step in expanding our global operations and profitability,” said Murren in a statement.
Excluding that as well as a 3 cents per share impairment charge, MGM Resorts’ net loss totaled 5 cents per share. Analysts expected a loss of 14 cents per share, according to FactSet.
Revenue rose nearly 17 percent to $1.81 billion from $1.55 billion last year. That beat analysts’ expectations of $1.58 billion.
Revenue from the company’s domestic results totaled $1.5 billion, up 4 percent compared with the prior year quarter as room prices and occupancy rates increased.
Domestically, casino revenue rose 1 percent, including a 4 percent increase in slots revenue.
Billionaire Kirk Kerkorian is a major investor in MGM Resorts International, which is based in Las Vegas.
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