Melco Crown Entertainment Q2 Results Miss View; Approves $500 Mln Share Buyback

(RTTNews) - Casino operator Melco Crown Entertainment Ltd. (MPEL) reported Thursday a profit for the second quarter that declined from last year, reflecting higher pre-opening and development costs as well as a revenue decline. Both adjusted earnings per ADS and quarterly revenues missed analysts' expectations.

"In the second quarter of 2014 we delivered solid underlying financial performance, driven primarily by our mass market table games business at City of Dreams where revenues increased approximately 38% on a year-over-year basis," Co-Chairman and CEO Lawrence Ho said in a statement.

The Hong Kong-based operator of casino gaming and entertainment resort facilities in Asia reported net income attributable to the company of $143.64 million or $0.26 per American depositary shares or ADS, for the second quarter, lower than $181.05 million or $0.33 per ADS in the prior-year quarter.

Excluding items, adjusted net income was $168.73 million or $0.30 per ADS, compared to $192.12 million or $0.35 per ADS in the year-ago quarter.

On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.36 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenue for the quarter declined 7 percent to $1.20 billion from $1.30 billion in the same quarter last year, and missed eight Wall Street analysts' consensus estimate of $1.30 billion.

The decline in net revenue was primarily attributable to lower group-wide rolling chip revenues, partially offset by improved mass market table games revenues.

Casino revenues decreased to $1.17 billion from $1.26 billion in the prior-year quarter.

Net revenue at City of Dreams remained flat with last year at $967.5 million. Rolling chip volume declined to $22.1 billion from $24.8 billion, and mass market table games drop increased 20 percent to $1.33 billion. Slot handle was up 26 percent to $1.51 billion from a year ago.

Net revenue at Altira Macau declined to $181.6 million from $278.8 million in the year-ago quarter. Rolling chip volume decreased to $8.3 billion from last year's $11.8 billion, and mass market table games drop increased 14 percent to $196.8 million from last year.

Net revenue from Mocha Clubs declined 2 percent to $36.5 million from last year. The number of gaming machines in operation at Mocha Clubs averaged about 1,200, compared to about 2,000 a year ago, due to the closure of four clubs.

Operating income for the quarter decreased to $162.81 million from $219.66 million from the year-ago quarter.

Separately, the company announced that its board of directors have approved the implementation of a $500 million stock repurchase program, complementing its ordinary dividend policy announced earlier in the year.

Looking ahead, the company noted that City of Dreams Manila is due to open later in 2014, marking its evolution into a regional player in the gaming and entertainment industry. Studio City, its second large-scale resort in Cotai, also remains on track to open in mid-2015, representing the next standalone integrated property to open in Macau.

"To ensure our properties are well positioned for the future, we continue with our market leading table and room optimization process, which has resulted in a further shift of tables in to the mass market segments at City of Dreams, while also making substantive improvements in the positioning and, in the case of City of Dreams, amenities available to visitors to Macau who continually seek a more diverse entertainment offering," Ho added.

In Thursday's regular trading session, MPEL is currently trading at $28.77, down $1.25 or 4.15% on a volume of 5.81 million shares.