Melco Crown Entertainment (MCE) suffered a fall in its share price yesterday on tougher VIP conditions in Macau and also on news that employees at its Taipei branch have been indicted for alleged violations to local banking and foreign exchange laws.
MCE reported that Q2 earnings per share fell 26 percent from the same quarter a year ago to 26 cents. Revenue slid 7.4 percent to $1.199bn, undershooting analyst estimates of $1.297bn. Melco CEO Lawrence Ho said that the shortfall was mainly due to slower VIP business, though this was offset by a 38 percent jump in mass market revenues. Net revenue at City of Dreams was $967.5 million compared to $967.0 million in the second quarter of 2013. Adjusted EBITDA was $290.2 million in the second quarter of 2014, representing a decrease of 3 percent in the comparable period of 2013. This was primarily due to lower rolling chip volume and rolling chip win rate, partially offset by growth in mass market table games drop and an improved mass market table games hold percentage. Total non-gaming revenue at City of Dreams increased in Q214 to $67.2 million, up from $62.2 million in the same quarter of 2013.
Ho also highlighted the new entertainment and dining precinct called SOHO, located on the second floor of City of Dreams, together with a substantial expansion of the property’s luxury retail offering which is anticipated to be operational in 2016, expanding the integrated resort’s appeal to a wider array of customers. Ho confirmed that Melco’s next big Cotai resort, Studio City, was on track to open in mid-2015.
Melco’s board has also approved a $500 million share buyback program which Ho said would provide them with “the mechanism to return surplus capital opportunistically and efficiently, while maintaining flexibility to fund our current operations and future development pipeline”. The buyback allowance will expire at the company’s 2015 annual general meeting.