Casino operator SJM Holdings saw Q3 profit fall 16.4% as Macau’s five-month long revenue slump continues to weigh on operators’ bottom lines. Net income in the three months ending Sept. 30 came to HKD 1.53b (US $197m) as revenue fell 14.1% to HKD 18b. SJM also saw its share of the overall Macau casino market fall to 22.5% from 24.3% in the same period last year.
In keeping with the narrative of Macau’s autumn of discontent, serious plunges in SJM’s VIP gambling turnover (-26%) and revenue (-23.6%) overcame modest gains in mass market gaming (+3.1%). SJM’s flagship Casino Grand Lisboa property saw gaming revenue fall 11% to HKD 6.9b. Non-gaming revenue fell 10% to HKD 163m as the Grand Lisboa Hotel’s occupancy rate tumbled seven points to 90.5%.
SJM’s year-to-date numbers are a little less severe, with profit (-4%), revenue (-1.6%) and earnings (-1.8%) reflecting the more lucrative first half of 2014. SJM CEO Ambrose So said his company had turned in a “decent” performance despite “well-publicized headwinds.”
These headwinds included a sustained period of Macau casino labor unrest in which SJM was a frequent target of public protests. The company agreed to two union demands during Q3, bonuses for casino staffers and the new ‘living subsidies’ program set to kick in next year, offering staff up to two months extra salary per year until 2020, when SJM’s casino concession comes up for renewal.
Analysts weren’t as understanding, with Credit Suisse suggesting the older pure-gambling casinos in SJM’s portfolio were “likely to underperform peers in this slower growth environment.” Construction of the Lisboa Palace, SJM’s first stab at a proper resort-casino, remains on schedule but the property won’t open until 2017. In the meantime, So said SJM plans to shift some of the Grand Lisboa’s VIP gaming tables to the premium mass segment and will add another 15 tables to the property “early next year.”
