LAS VEGAS, Nev. – MGM Resorts’ third-quarter loss narrowed as gambling revenue improved and it paid less interest on debt.
For the period ended Sept. 30, MGM Resorts International lost $31.9 million, or 7 cents per share. A year earlier the casino and lodging company — whose brands include Bellagio, MGM Grand and The Mirage — lost $181.2 million, or 37 cents per share.
Revenue rose 9 per cent to $2.46 billion. Casino revenue climbed 13 per cent. Sales also rose from booking hotel rooms and selling food and drinks, as well as entertainment and retail.
But shares of Las Vegas-based MGM Resorts International fell $1.43, or 7.1 per cent, to $18.86 in afternoon trading Thursday.
Excluding one-time items, MGM posted a profit of 2 cents per share, beating Wall Street’s expectations, according to FactSet. But John Kempf, a casino industry analyst with RBC Capital Markets, said that its profit margins were weaker than expected. He added that disappointing third-quarter results from MGM competitor Boyd Gaming Corp. on Thursday might have made investors nervous about the sector.
Casinos in the U.S. have been slower to recover from the economic downturn, and gambling companies have looked abroad for growth. Macau, the only place in China where casino gambling is legal, has been the gambling capital of the world since 2006.
The company’s MGM China operates the MGM Macau casino-resort and is developing a new Cotai resort. Revenue rose 22 per cent to $808 million for MGM China.
At its U.S. resorts, room revenue rose 5 per cent. Las Vegas Strip properties reported a 3 per cent rise in revenue per available room. Revenue per available room, or revpar, tracks hotel room rates and how many rooms are booked. It is a key gauge of a lodging operator’s performance.
CEO Jim Murren touted the company’s success on the Strip during a conference call with analysts Thursday.
“We have been targeting investing in our resorts here in Las Vegas, and I’m happy to say we’re seeing good returns on those investments,” he said.
MGM is working on expanding into several new U.S. markets. It is pursuing projects in Maryland and Massachusetts, expected to open no sooner than 2016.
On Thursday, Murren said the company also expects to come back to New Jersey by the first quarter of next year.
MGM got into trouble with New Jersey regulators when the company opened a Macau casino with Pansy Ho, the daughter of a gambling kingpin allegedly linked to Chinese gangs.
The state found the partnership unsuitable in 2010, and forced MGM to place its 50 per cent share of the Borgata casino — which is in Atlantic City — into a trust. MGM denied that there was anything inappropriate about the relationship, and did not cut ties with Macau.
This year, the company reapplied with New Jersey regulators.
“We’re pretty confident, even though we can’t speak for the regulators,” CFO Dan D’Arrigo said during a telephone interview. “We believe the process has been going well.”
While the Atlantic City market remains weaker than Las Vegas, and far weaker than Macau, MGM has maintained that they see the Borgata as a promising source of revenue.
D’Arrigo said the company is also watching Japan, to see if the country might become the next major market for U.S. casino companies. Japanese lawmakers have been working on a plan to legalize casinos.