MGM Resorts delays Cotai opening amidst market uncertainty

MGM Resorts International said it’s delaying the opening of its new resort on Cotai due to the soft market conditions in Macau and the timing of other openings.

MGM said it made the strategic decision to move the opening of its MGM Cotai development from the fourth quarter of 2016 to the end of the first quarter of 2017. There is no change to the current budget of $3.0 billion, which excludes development fees, capitalized interest and land related costs.

MGM also said it was taking a $1.5 billion non-cash goodwill impairment charge related its its MGM China purchase. The charge follows an annual review of its goodwill carrying values and amidst reduced cash flow forecasts for MGM China’s resorts and lower valuation multiples for gaming assets in the Macau market.

Analysts said they had expected the push back in the Cotai opening and that overall the results were solid. MGM’s Macau operations dragged down company profit for Q4, overshadowing a strong performance from U.S. operations. 

The company had a loss of $781.4 million, or $1.38 per share, including a non-cash goodwill impairment charge of  $1.33 per share, compared to a loss of $342.2 million, $0.70 in the prior year fourth quarter. Without the charge, the loss would have been $0.05, missing the $0.09 profit analysts had forecast.

Total revenue was $2.37 billion, down from $2.58 billion a year earlier. Excluding promotional costs, revenue was $2.19 billion compared with $2.38 billion. Analysts expected revenue of $2.25 billion.

The company’s MGM China unit earned net revenue of $499 million, a 31 percent decrease compared to the prior year quarter. Adjusted EBITDA was $131 million, down 29 percent, but beat the consensus for $124 million.

Mass table revenues were down 14 percent and VIP volumes were down 57 percent.