SJM Holdings revenue, profit and market share all on the decline in 2015

TAGs: Macau, SJM Holdings

sjm-holdings-revenue-profit-fallMacau casino operator SJM Holdings saw profit fall nearly two-thirds in 2015 as the company’s VIP gambling revenue was cut in half.

SJM reported total revenue of HKD 49.2b (US $6.3b) in 2015, representing a year-on-year fall of nearly 39%. Adjusted earnings fell 50% to HKD 3.86b while profits fell 63.4% to HKD 2.5b. All but HKD 600m of SJM’s total revenue came via gaming activity.

The company says profits would have been slightly higher were it not for a HKD 250m impairment loss on some equity securities and the loss of HKD 143m via the suspension of one of SJM’s satellite casinos. But still, you know, sucktastic.

SJM’s VIP gaming revenue fell 48% to HKD 25b, while VIP chip sales fell 55%. SJM’s complement of VIP tables fell from 571 at the end of 2014 to just 476 by Dec. 31, 2015. The number of junket operators in action at SJM casinos last year underwent a similar contraction, falling from 35 to just 19.

Mass market table revenue fell 24% to HKD 22.4b despite the number of mass tables increasing 4% to 1,242. Mass market tables’ share of SJM’s overall revenue rose from 37.4% in 2014 to 46.1% last year. Slots revenue fell 15% to HKD 1.14b but increased its share of overall revenue from 1.7% to 2.3%.

SJM’s flagship property Casino Grand Lisboa bore the brunt of the decline, as revenue fell 44% to HKD 16.5b. Business at SJM’s other self-promoted casinos – Casino Lisboa and Casino Oceansus at Jai Alai – was down 34% to HKD 6.6b. The 14 third-party casinos operating under SJM’s license saw revenue fall 36% to HKD 25.5b.

SJM’s share of Macau’s overall gaming revenue pie came to 21.7%, down from 23.2% in 2014. SJM has been losing ground to its rivals for years now, having been well over one-quarter (26.7%) as recently as 2012.

Part of the reason for SJM’s decline is its reliance on a stable of aging casinos on Macau’s peninsula and its corresponding lack of a flashy integrated resort on Cotai, where all the cool kids now hang. SJM’s Grand Lisboa Palace – formerly just the Lisboa Palace – plans to top off its superstructure this year but won’t be ready to welcome its first guest until the end of 2017, so there’s lots more pain ahead.


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