Melco Crown Q2 revenue drops 24 percent, missing estimates

Melco Crown Entertainment Q2 earnings and revenue missed analysts’ forecasts as VIP volumes in Macau tumbled and mass market also declined.

Adjusted net income was $44.2 million, or $0.082 per ADS, down from $163.7 million, or $0.29 a year earlier.

Net income attributable to Melco was $24.3 million, or $0.045 per ADS, compared with net income of $143.6 million, or US$0.26 per ADS, in the second quarter of 2014. That misses estimates for $0.08, according to Capital IQ.

Net revenue for the second quarter of 2015 was US$916.8 million, down about 24 percent from the same quarter last year and missing targets for $958.89 million.

Adjusted property EBITDA fell 35 percent to $204.9 million.

The company said the decline was due to lower rolling chip revenues and mass market table games revenues in Macau. Table hold was off 500 bps YoY, impacting EBITDA by $20 million for the quarter. Adjusting for this, MPEL would have slightly exceeded expectations, with margin performance in line with other Macau operators’ earnings releases.

The Macau results were partially offset by a stellar performance in net revenue generated by City of Dreams Manila, which started operations in December 2014.

At the company’s Macau flagship City of Dreams property, revenue dropped to $654.2 million compared to $967.5 million in the second quarter of 2014, while adjusted EBITDA fell 38 percent to $179.0 million.

Rolling chip volume totaled $11.1 billion, half of the $22.1 billion recorded in the 2014 quarter. The rolling chip win rate was 2.7 percent in both quarters ended June 30, 2015 and 2014.

Mass market table games drop decreased to $1,198.8 million compared with US$1,330.8 million in the second quarter of 2014.

At the City of Dreams Manila, net revenue was $75.0 million with adjusted EBITDA of $12.6 million.

Rolling chip volume at the property totaled $495.8 million. The rolling chip win rate was 2.4 percent in the second quarter of 2015. The expected rolling chip win rate range is 2.7 percent–3.0 percent.

Mass market table games drop was $116.6 million and the mass market table games hold percentage was 25.4 percent in the second quarter of 2015. Management noted the property is only now starting to ramp, with rolling volumes up 2.5 times higher in July than in June, benefiting from the increase in VIP operations at the property.