MGM posts loss, but revenue leaps on hotel, casino

AP News
Posted: Aug 07, 2012 1:27 PM
MGM posts loss, but revenue leaps on hotel, casino

NEW YORK (AP) — MGM Resorts International on Tuesday posted a second-quarter loss double what Wall Street forecast, but that didn't rattle investors. They focused instead on the casino and resort operator's surging revenue, driven by better-than-expected results in China and higher revenue for hotel rooms.

Shares jumped more than 10 percent.

Executives discussing the results during a conference call said they expect revenue from hotel rooms to be lower in the third quarter, as skittishness about the economy in May and June led some would-be travelers to scratch plans for fall trips. The visitors who traveled in the second quarter, MGM said, spent more at casinos and paid higher hotel rates but saw fewer shows, bought cheaper food and shopped less.

Results for the company, which runs the MGM Grand, Bellagio, Mandalay Bay among others, have been a story in contradictions for the last several years. While its revenue has steadily improved, it has posted losses in all but a handful of quarters, as it dealt with a mountain of debt and declining values of some of its properties.

As of June 30, it had about $13.4 billion in debt, but it said it's trying to refinance much of that at lower interest rates, which will enable it to save money.

Between April and June, MGM lost $145.5 million, or 30 cents per share, compared with a year-ago profit of $3.44 billion, or $6.22 per share.

Last year's second quarter included a $6.30 per share gain on consolidation of MGM China. That unit runs a casino in Macau, the only spot in China where gambling is legal. It went public in Hong Kong last June.

Revenue shot up 29 percent, to $2.32 billion, from $1.81 billion last year.

Analysts, on average, forecast a loss of 15 cents per share, on revenue of $2.35 billion, according to FactSet.

Casino revenue in the domestic resorts MGM owns fell 1 percent. Slots revenue was flat, while revenue from hotel rooms rose 3 percent on higher rates.

MGM China revenue rose 6 percent, driven by higher traffic at its main floor table games and slots.

MGM still has much of its business in Sin City, unlike its major counterparts Las Vegas Sands Corp. and Wynn Resorts International.

Las Vegas Sands Corp., which operates The Venetian and The Palazzo in Las Vegas, said last month that its second-quarter profit tumbled by 35 percent, mostly due to lower table winnings in Asia and at home. Wynn Resorts Ltd. said its second-quarter earnings rose from the same quarter last year, which was weighed down by a hefty charge. But revenue fell at its operations in both Las Vegas and Macau.

MGM shares added 95 cents, or 10.2 percent, to $10.33. The stock has traded between $7.40 and $14.94 in the past 52 weeks.