Sands China revenue slashed by Covid-19 in April

2 June 2020

Disruption caused by novel coronavirus (Covid-19) has badly hit Las Vegas Sands’ Sands China subsidiary, with the business revealing that revenue for April plummeted 98.7% year-on-year to just $9m in April.

The decline in revenue, which followed a 65.3% drop in first quarter revenue to $808m, contributed to Sands China posting an operating loss of $164m, compared to a $166m profit in the prior year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) losses amounted to approximately $3.5m per day, for a loss of $105m for April. The same month in 2019 had seen the business record EBITDA of $239m, equating to daily earnings of $8m.

While it did not provide figures for May, the operator said figures for revenue, operating and net losses, and EBITDA losses, were “not materially different” from April’s results.

This reflects a significant decline in visitation from mainland China to Macau. The autonomous region’s government revealed last month that visitation was down by 99.6% year-over-year in April, with monthly gross gaming revenue dropping 96.8%. Currently all visitors to the island are required to self-isolate for 14 days to avoid transmission of Covid-19.

Looking ahead, Sands China said that it estimates a monthly run-rate of $110m in operating costs, with development and maintenance capital expenditure totalling $65m, and $25m in interest expenses.

The operator said it had taken steps to mitigate the financial impact of the pandemic, such as a cost reduction programme to minimise outgoings on non-essential items. Its board of directors recommended a final dividend should not be paid for its 2019 fiscal year.

Sands China said its strong balance sheet and liquidity would fund operations for a year under the current operating conditions. As of 29 May it had total liquidity of $2.41bn, comprising $801m in cash and cash equivalents, and $1.61bn of available borrowing capacity under its 2018 revolving credit facility.

“SCL believes it will be able to support its continuing operations, complete the major construction projects that are underway, and respond to the current Covid-19 pandemic challenges,” the operator said.

However, it admitted that the duration and intensity of the pandemic on its operations were uncertain, making it impossible to reasonably estimate the impact on its full-year results for 2020.

“It is unknown when the Covid-19 pandemic will end, when or how quickly the current travel restrictions will be modified or cease to be necessary and the resulting impact on the willingness of SCL’s customers to spend on travel and entertainment,” it explained.