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Wynn slips to loss in Q1 due to Covid-19 closures


Casino operator Wynn Resorts has put a net loss of $402.0m in the first quarter primarily down to the temporary closure of its sites in the US and Macau due to the novel coronavirus (Covid-19) pandemic.

Operating revenue for the three months to March 31, 2020, amounted to $953.7m, down 42.3% from $1.65bn in the corresponding period last year.

Wynn reported year-on-year declines across all operations in the US and Macau during the period, as its properties were forced to close as a result of measures designed to slow the spread of Covid-19 in both the US and China.

Both the Wynn Macau and Wynn Palace, which are located in Macau, closed for a 15-day period in February 2020 and resumed operations on a reduced basis on February 20.

Revenue at the Wynn Macau fell 64.3% from $726.6m to $259.5m in Q1, while operating revenue from Wynn Macau also dropped 56.2% from $523.9m to $229.5m.

Looking at the US, the Wynn Las Vegas in Nevada ceased all operations and closed to the public on March 17, and will remain closed until authorized to re-open. Partly as a result of the closure, operating revenue fell 19.3% to $323.8m.

Wynn also referenced Encore Boston Harbor, its new integrated resort that opened in Everett, Massachusetts, in June last year. Operating revenue stood at $140.9m in the first quarter of this year.

In terms of spending in Q1, total operating expenses amounted to $1.20bn, down 14.3% from $1.40bn in the same period last year. Casinos costs were again the main outgoing for Wynn, with expenses totalling $442.7m, down 41.0% year-on-year.

However, general and administrative costs were up by 7.8% to $234.3m, while expenditure associated with food and beverage hiked 18.2% to $175.9m. There was also an additional $15.2m attributed to provision for credit losses, while depreciation and amortisation costs climbed 30.8% to $178.7m.

Despite the overall cut in spending, the decline in revenue meant that operating income for the period came in at a loss of $247.4m, compared to a positive of $255.2m last year.

After accounting for increased interest expense of $128.8m, as well as a change in derivatives fair value amounting to $15.7m, the operator posted a pre-tax loss of  $374.5m, in stark contrast to a profit of $161.4m in Q1 2019. Net loss after tax stood at $450.3m, down from an profit of $159.7m last year.

Wynn also noted that after accounting for a $48.2m loss attributable to non-controlling interests, net loss attributable to the operator amounted to $402.0m for the quarter, compared to a profit of $104.9m in 2019.

Analysing the quarterly performance, chief executive Matt Maddox paid tribute to Wynn’s efforts to the efforts of its leadership and staff during the coronavirus crisis.

“In mid-March we led the industry by identifying the need for short-term closure in Las Vegas and Boston, thereby doing our part to flatten the curve,” he said. “Concurrently, we decided to invest in the health and safety of our approximately 30,000 team members globally by committing to pay their full wages and benefits through May.

“At the same time, we have also been focused on our long-term business prospects, taking steps to bolster our already strong liquidity position by opportunistically issuing $600m of unsecured notes and increasing our financial flexibility.”

Despite taking a heavy financial hit in Q1, Maddox was optimistic about the rest of the year and beyond, saying he expects the operator to bounce back.

“While the current environment is clearly challenging, we are confident that travel and tourism will recover in both the US and China, and our industry leading assets, fortress balance sheet and talented team members position the Company to thrive in the years ahead,” he said.