Melco Crown Entertainment (MPEL), the Sino-Australian joint venture developing gaming resorts in Macau, reported a net loss of USD2.5 million for the twelve months of 2008, compared to a net loss of USD178.2 million for the twelve months of 2007.
MPEL’s improved performance in 2008 was affected significantly by the cash generated by VIP play at Crown Macau, the company’s first and so far only property in the territory.
In the first quarter of 2008, Crown Macau managed to grab around 18 percent of the entire market for VIP baccarat in Macau, thanks to its deal with junket consolidator Amax. The latter managed to secure for junket agents an eye-watering 1.25 percent commission on rolling chip turnover. Unsurprisingly, the agents lined up to bring their players to Crown Macau. The players themselves seemed to like the facilities as well, creating a virtuous circle in business terms.
In the latter stages of 2008, trading conditions turned tougher both for Amax and MPEL, with rolling chip volume on VIP play at Crown down around 27 percent in the fourth quarter. This was probably due to the triple whammy of government pressure to cap agent commissions, China’s visa restrictions and a global economic downturn affecting the regional economy, and the reduced ability of Chinese VIP players to raise credit.
Nonetheless, because Amax only started working with Crown Macau in December 2007, net revenue for Q4 ’08 still registered an improvement on the equivalent period 12 months earlier.
For the fourth quarter of 2008, net revenue was USD253.5 million, up from USD179.7 million for the comparable period ending 31st December 2007.
Adjusted EBITDA was USD22.4 million for the fourth quarter of 2008, up from a loss of USD1.6 million in the fourth quarter of 2007.
The Company recorded a net loss for the fourth quarter of 2008 of USD18.9 million, or USD0.04 per share, compared to a net loss of USD36.5 million, or USD0.09 per share, in the fourth quarter of 2007.
Lawrence Ho, Co-Chairman and Chief Executive Officer of MPEL was upbeat about the company’s prospects.
“The opening of City of Dreams will solidify our portfolio approach to development and change the complexion of our company in almost every measurable way, from the market segments we address to our overall market share,” said Mr Ho.
Mr Ho added the company held approximately USD825 million in cash excluding cage cash on its balance sheet at the end of the fourth quarter, and had undrawn credit facilities available of an additional USD320 million.
He said MPEL expected to spend approximately USD620 million on construction activities and pre-opening preparations at City of Dreams, from the start of the current quarter through to the opening of the property, which MPEL said would be in early June.
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