HONG KONG (Dow Jones)–Gambling company Melco International Development Ltd. (0200.HK) said Tuesday its 2009 net loss narrowed from a year earlier, though its core casino operations were weak as the global economic downturn and poor performance at itsAltira Macau casino took a toll on business.
The company, which is controlled by Lawrence Ho, the son of Macau gambling mogul Stanley Ho, said its loss for the 12 months ended Dec. 31 totaled HK$1.45 billion (US$187 million), compared with a net loss of HK$2.36 billion in 2008. Still, the loss was wider than the average net loss forecast of HK$815.36 million in a Thomson Reuters poll of eight analysts.
Revenue for the period rose 2.7% to HK$709.6 million from HK$690.9 million.
The disappointing results come despite the ongoing rebound in Macau’s gambling revenue since the second half of 2009 and the stronger than expected performance by casino operator SJM Holdings Ltd., which has the largest market share by revenue in Macauand is controlled by Ho’s father.
Macau’s gambling revenue rose 9.7% in 2009 despite a 12.4% fall in the first half of the year. The improved trend has continued into 2010, with revenue jumping 66% in the first two months this year, according to media reports.
The company said 33.5%-owned Melco Crown Entertainment Ltd. (MPEL), which operates Melco’s casino businesses in Macau, contributed an HK$803.4 million loss to the group, compared with an attributable profit to the group of approximately HK$33.1 million a year earlier.
Nasdaq-listed Melco Crown reported last month a net loss of US$308.5 million for 2009, compared with a net loss of US$2.5 million the previous year. Melco Crown operates casinos at the Altira Macau and the City of Dreams, which opened in June last year in Macau’sCotai area.
Melco Crown’s unimpressive results were driven in part by weaker VIP business at its casinos, which had a combined rolling chip table games hold percentage of just 2.4% in the fourth quarter, below the company’s average expectation of 2.7% to 3.0%. Rolling chip volume is a measure of a casino’s VIP business.
Earnings were also hit by a slowdown in VIP business at Altira Macau from the cancellation of an arrangement with a junket aggregator to bring players to the casino during the year.
Melco Crown cancelled its contract with Amax Holdings Ltd.’s (0959.HK) 80%-owned AMA International last year following the Macaugovernment’s decision to cap junket commissions at 1.25% effective Dec. 1. AMA, which acted as a middleman between the casino and junket agents, had previously garnered a 1.35% commission from the casino operator. Melco Crown now works directly with individual junkets, which it says is a “profitable business model.”
Still, the younger Ho, who is chief executive of both Melco Crown Entertainment and Melco International Development, was upbeat on the group’s 2010 outlook in a statement accompanying the latter’s results.
“We expect 2010 to be an exciting and rewarding year for Melco, particularly given the positive economic outlook in China,” Ho said.
Melco International’s directors didn’t recommend a final dividend.
