Macau casino operator SJM Holdings announced its upcoming East-meets-West themed Lisboa Palace resort on Cotai would cost HK$5 billion (US$640 million) more than it had originally budgeted. The company said the labor crunch and increased construction costs were driving the increase.
A year ago, SJM had estimated Lisboa Palace would cost HK$25 billion. It has now revised the figure to HK$30 billion (US$3.9 billion). The resort is scheduled to open in Q4 2017.
Earlier in February, SJM announced its net profit for 2014 fell 12.7% year on year to HK$6.73 billion (US$867 million) from HK$7.71 billion the previous year.
The weaker earnings come amid a downturn in Macau’s gaming industry, which is reeling under the impacts of several unfavorable developments, including Beijing’s ongoing corruption crackdown and efforts to stamp out illicit outflows of money, China’s weakening economy and property market and emerging cracks in its over-leveraged financial sector, not to mention the total ban on smoking in all main-floor casino areas that came into effect on 1st October.
SJM’s gaming revenue was HK$79.3 billion in 2014, down 8.8% from a year earlier, largely attributable to the drop in business from VIP gamblers. Its VIP gaming revenue was down 17.3% in the year, while mass-market table gaming revenue rose 8.9%.
The company recommended a final dividend of 62 Hong Kong cents, compared with 50 Hong Kong cents in 2013.
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