Sands China net losses expand to US$422 mln in Q2

Sands China ended the second quarter of this year with US$422 million (MOP3.4 billion) in net losses, a 144 per cent rise over the losses reported in the same period of last year, the group’s latest financial report reveals.

The results were an increase from the US$336 million in losses reported in the previous quarter.

The group’s adjusted property EBITDA loss amounted to US$110 million for the second quarter of 2022, about the same as in 2021, as total revenue dropped by 56 per cent year-on-year to HK$368 million.

In the report the chairman and CEO of Las Vegas Sands, Robert G. Goldstein said that the group was expecting “greater volumes of visitors” to eventually be able to travel to both Singapore and Macau.

‘We remain confident in the recovery of travel and tourism spending across our markets. Demand for our offerings from customers who have been able to visit remains robust, while pandemic-related travel restrictions continue to limit visitation and hinder our current financial performance,’ Goldstein pointed out.

The group also held US$162 million in interest expenses in the second quarter of 2022, with weighted average borrowing costs at 4.3 per cent, while the weighted average debt balance increased due to borrowings of US$951 million under a credit facility in the last year.

Sands China announced this month hat it will receive a US$1 billion loan from parent company Las Vegas Sands and repayable on July 11, 2028.

Most of the city’s gaming concessionaires are expected to see their bottom line worsen during the second quarter of this year following pandemic disruptions due to outbreaks in several mainland China cities, with Sands China the first to issue this quarter’s report.

However, analysts have estimated that third-quarter results could be even direr following the worst outbreak reported in the Macau SAR since the start of the pandemic, with virtually no visitors and with casinos closed for about two weeks.

Macau’s average daily casino gross gaming revenue for the first 10 days of July stood at US$2.48 million, or a 62 per cent sequential drop compared to the previous week.

The SAR’s gross gaming revenue had already fallen to its lowest monthly tally this year in June – and the lowest since September 2020. 

A recent Morgan Stanley report estimated that Macau SAR gaming operators are now expected to end 2022 with nearly US$800 million in EBITDA losses after the most recent pandemic outbreak.

The heads of Sands China, MGM China and Wynn Macau China noted that the city’s concessionaires at the moment can only ‘hunker down and wait’ for the pandemic impact on the SAR to go away, but maintained hopes of a turnaround in the future.

In the financial report, Sands China pointed out it believes that as the market eventually recovers, its US$2.2 billion investment program at Four Seasons
Macao and The Londoner Macao will provide “outstanding growth opportunities in both the premium and mass customer segments”.

The group also added it appreciated the clarity of the revised gaming law passed in June, and was looking forward to participating in the concession retendering process, so as to arrange another gaming license after the current one expires on December 31, 2022.

Despite poor Macau results, Las Vegas Sands reported better than expected results in Singapore, with Marina Bay Sands ending the second quarter with US$209mm property EBITDA as travel to the city-state reopened.