MBS’ earnings shrink yet again

SINGAPORE — Lady Luck continued to frown on Marina Bay Sands (MBS), one of the two integrated resorts in Singapore, as betting in both the VIP and mass market segments shrank.

Adjusted property earnings before interest, tax, depreciation and amortisation (EBITDA), the key measure for operating performance, fell 1.7 per cent year-on-year to US$357 million (S$484.17 million) in the second quarter, said its parent company Las Vegas Sands.

Total revenue slipped 0.4 per cent to US$710.1 million, with the casino business bringing in 1.6 per cent less revenue, and convention, retail and other income down 3.3 per cent. On the bright side, food and beverage revenue rose 11.6 per cent, mall revenue edged up 0.2 per cent and rooms revenue increased 0.6 per cent.

In the financial report, Las Vegas Sands maintained confidence in its Singapore operations, saying MBS “continues to attract visitors from across the region to Singapore”. “While gaming volumes in Singapore were softer during the quarter, solid growth in slot revenues and the continued resilience of room rates and mall revenues” contributed to the adjusted property EBITDA figure, it added.

VIP betting volume fell 29.1 per cent to US$6.7 billion, while the rolling chip win percentage — a measure of winnings at tables for high rollers — rose to 3.5 per cent from 2.78 per cent in the previous corresponding quarter.

Mass market volume fell 10.7 per cent to US$935.7 million, with a casino win rate of 28 per cent versus 27.5 per cent in the same period last year.

Hotel occupancy improved 0.5 percentage point to 96.4 per cent, but the average daily room rate fell 0.5 per cent to US$375.

Singapore’s glittering casinos, touted as an economic lifeline a decade ago, appear to be losing their lustre. Their fortunes are waning — total gaming revenue fell 16 per cent last year — as Chinese high rollers have stopped coming due to a slowing economy and a crackdown on corruption back home.

And restrictions such as levies on Singapore gamblers mean casinos cannot turn to locals to help make up the shortfall, a key revenue stream in casinos elsewhere.

After bumper results in the third quarter last year, MBS’ earnings took a hit in the fourth quarter and posted a 33.8 per cent plunge in adjusted property EBITDA in the first quarter ended March to US$274.9 million.

Genting Singapore, which runs Resorts World Sentosa, also reported an 83 per cent year-on-year plunge in net profit to S$10.8 million in the first quarter.

RWS, which employs 12,000 people, recently cut close to 400 casino jobs, citing difficulties facing the business, TODAY reported last month.

So far, MBS, which employs about 9,500 people, has dismissed talk of potential layoffs.

But things could get even tougher for the duopoly, as regional rivals are fast nipping at the heels of Singapore’s gaming industry.

With the region’s governments easing their stance on gaming over the past decade, neighbouring countries such as Cambodia, South Korea, Vietnam and the Philippines have been drawing in investments for mega-sized integrated resorts. More casinos are also opening in mature markets such as Macau and Australia.

By 2020, about 17 more casinos will open in the Asia-Pacific region, with Macau — the world’s biggest gambling destination — set to be home to six of these new casinos. Three of the new casinos will be in South Korea (including one by Genting Singapore in Jeju), with Russia, New Zealand, Australia and the Philippines opening two new casinos each in the next five years. Japan is also moving closer to legalising casino gambling with a Bill that allows casino-based IRs, similar to Singapore.