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MGM Resorts slips to $50.4m loss in first half


MGM Resorts International saw revenue for the first half of 2020 badly hit by the novel coronavirus (Covid-19) pandemic, posting a net loss of $50.4m for the period.

Net revenue for the six months to June 30 amounted to $2.54bn, down 60.3% from the $6.40bn that was generated in the same period last year.

Like many other bricks and mortar casinos operators around the world, MGM was hit hard by the pandemic. Its venues in the US and Macau have all been shuttered as a result of the crisis, and spent most of the period closed to customers.

Though casino gaming revenue remained the main source of income for MGM during the six months, the $1.22bn total represented a 61.1% decline from H1 2019’s $3.22bn.

Rooms revenue dropped by 59.9% year-on-year to $465.6m, while food and beverage revenue fell 60.0% to $426.5m. Entertainment and retail revenue slipped 56.2% to $318.5m, though reimbursed costs were down 48.7% to $114.4m.

In the US, casinos in Las Vegas, Nevada, closed in mid-March and did not reopen until June 4, though MGM’s Excalibur and Luxor properties did not resume any operations until June 11 and 25, respectively. As such, Las Vegas revenue was hit hard, dropping 55.6% to $1.28bn.

MGM’s Gold Strike location in Mississippi reopened on May 25, followed by Beau Rivage on June 1, MGM Northfield Park on June 20 and MGM National Harbor on June 29.

Further afield and MGM’s operations in China were also impacted by measures imposed in the region, namely travel and entry restrictions for Macau. These measures meant revenue plummeted 78.8% to $306.6m.

Looking at overall costs for the period, total expenses amounted to $2.35bn, down 58.9% year-on-year, as spending was reduced during the period of shutdown across MGM’s land-based network.

Casino costs were more than halved from $1.79bn to $829.1m in the first half, while rooms, food and beverage, entertainment and retail expenses followed a similar pattern, due to the casino closures.

General and administrative costs remained relatively level at $1.05bn – its main outgoing in for the period – while corporate expenses edged up 20.6% to $286.4m. MGM also noted a $1.49bn gain on real estate investment trust transactions, after its decision to sell the MGM Grand and Mandalay Bay properties in Las Vegas.

When also accounting for $27.4m in income from unconsolidated affiliates, MGM ended the period with $216.3m in operating income, down 70.8% from $741.7m at the same point last year.

However, MGM also reported $486.2m in non-operating expenses, which in turn led to a loss before tax of $269.9m, compared to $225.6m in profit at the end of June 2019.

MGM did receive $7.9m in tax benefits and also noted $211.6m in net income from non-controlling interests, but this did not stop it posting a net loss of $50.4m for the period.

Bill Hornbuckle, who was this week confirmed as the new chief executive of MGM, said that despite the reopening of casinos, the operator will face a number of challenges moving forward,

“As we look ahead, we believe the long term fundamentals of our business and the broader industry remain intact,” he said. “However, the near term operating environment will remain challenging and unpredictable as Covid-19 case trends, health and safety protocols, and travel restrictions continue to heavily impact our business.

“We remain focused, flexible, and disciplined in navigating this evolving landscape while continuing to pursue our long-term growth opportunities, supported by our strong liquidity position.

“As such, we remain excited about our integrated resort opportunity in Osaka, expanding our footprint in Macau, and positioning BetMGM as a leading player in the US sports betting and igaming markets.”

As US casinos began to shut down in mid-March, this meant most of the impact of the pandemic was felt in the second quarter, during which revenue plummeted 91.0% to $289.8m.

Las Vegas revenue fell 89.7% to $150.8m in the three months to June 30, while Mississippi revenue dropped 90.0% year-on-year to $89.0m and China revenue 95.3% to $33.2m.

Though costs were reduced by 54.3% to $1.32bn, MGM ended the quarter with an operating loss of $1.04bn. After taking into account other expenses, as well as $270.2m in tax benefits and $79.2m in income from non-controlling interests, MGM recorded a net loss of $857.3m, compared to a profit of $43.4m last year.

“During the second quarter, we began re-opening our properties across the US and have been heartened by the better than expected demand in the marketplace,” Hornbuckle said.

“I am grateful to the men and women who continue to dedicate their efforts to re-opening our properties and welcoming our guests, safely, once again.

“In addition, our MGM 2020 plan and modifications to our operating model have directly contributed to our margin improvements during the period in which our properties were open.”