Caesars Entertainment Corp, the largest U.S. owner of casinos and currently planning its expansion into Asia, said its third-quarter loss widened as casino revenue growth was sluggish. The firm on Monday reported a third-quarter net loss of US$908 million or US$6.29 per share compared with a loss of US$761 million or US$6.03 per share a year earlier.
Net revenue was up 6 percent compared to the third quarter of 2013 to US$2.2 billion, with casino revenue inching up 0.3 percent to US$1.4 billion, the firm said.
Consolidated adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) declined 12.9 percent year-on-year to US$443 million. Operating expenses for the quarter were lower at US$2.54 billion compared with US$2.61 billion a year ago.
The increase in casino revenue “was driven mainly by the opening of Horseshoe Baltimore and The Cromwell, offset by significant unfavourable hold and lower volumes at Caesars Palace,” management said in prepared remarks to analysts.
Results at Caesars Palace (pictured) were held back by lower winnings, or an unfavourable hold, for the casino and a US$20 million rise in bad-debt expense, the company reported.
Caesars is struggling to cope with a slow recovery in gambling spending nationally in the U.S. and the debt it took on in a 2008 leveraged buyout.
The long-term debt of the company’s consolidated business reached US$22.9 billion at the end of September, down from US$24.2 billion at the end of June.
Caesars plans cost-cutting that will add US$250 million to US$300 million next year to EBITDA, chief executive Gary Loveman said in the prepared remarks.
The company also said it has “commenced formal discussions with several groups of creditors” to improve the financial condition of its Caesars Entertainment Operating Co unit, the controller of 44 gaming and resort properties.
“While it is premature to report on the details of these negotiations with creditors, it is fair to say that the talks have been constructive,” Mr Loveman said.
Caesars’ shares declined 4.6 percent to US$11.54 at the close in New York on Monday. The stock has lost 46 percent this year.
Caesars operates more than 50 casinos in the United States. The firm is a partner in a consortium that plans to break ground next year on a casino project in South Korea’s Incheon. The scheme is scheduled to open in 2018.
The company is also in talks to invest more than US$1 billion in a casino resort in the Philippines, although the government there seems to be divided on the proposal. Caesars management gave no details about their expansion plans for Asia during Monday’s conference call.
Separately, Caesars named Eric Hession, the company’s senior vice president and treasurer, as chief financial officer, effective January 1, 2015. Mr Hession will succeed Donald Colvin, who retires at the end of December.
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”Assuming that our [Tigre de Cristal] phase two project and the other future operators’ development plans remain on track, we may see the benefits of a ‘cluster’ effect [in the Primorye Integrated Entertainment Zone] as early as 2021”
Summit Ascent, lead developer of Tigre de Cristal