Caesars Entertainment Corp., the world’s biggest casino company, reported a fourth-quarter loss after cost cuts and the acquisition of a Las Vegas casino failed to offset declines in Atlantic City, New Jersey, properties.
The net loss of $196.7 million compares with a profit of $295.6 million a year earlier, when earnings were boosted by a gain from extinguishing debt early, the Las Vegas-based company, formerly called Harrah’s, said today in a statement. Sales rose 1 percent to $2.12 billion, and a measure of cash flow climbed.
Las Vegas casinos are beginning to recover following record declines since Caesars was taken private in a January 2008 buyout. Caesars canceled a planned initial public offering last year, after Chairman and Chief Executive Officer Gary Loveman reduced costs, slashed debt and extended maturities in a series of balance sheet restructurings.
“The recovery in consumer spending has been late to find itself in the gaming sector,” Loveman said today on a conference call. Recovery is now underway as “group business bookings are stronger in Las Vegas,” and high-roller VIP business is “bouncing back”.
Cash flow, measured as adjusted earnings before interest, taxes, depreciation and amortization, increased 5.1 percent to $439.9 million in the quarter.
Las Vegas casino cash flow gained 5.2 percent to $183.7 million, boosted by the addition of Planet Hollywood. In Atlantic City, where Harrah’s owns four casinos, Ebitda tumbled 51 percent to $32.9 million.
Gambling revenue in Atlantic City has fallen 31 percent in 2010 from its 2006 peak, New Jersey Casino Control Commission data shows, largely due to intensifying competition in nearby states.
Caesars has cut $648.8 million in costs since being taken private and aims to trim a further $207.5 million, the company said today.
The company canceled its IPO in November, citing “market conditions.” The IPO aimed to raise more than $500 million for expansion, including finishing the Octavius Tower at Caesars Las Vegas, and developing the LINQ retail and entertainment area next to the Flamingo. The company yesterday priced a $400 million loan to fund the projects.
Caesars will invest in and run two casinos in Cleveland and Cincinnati, Ohio, being developed by Dan Gilbert, the founder and chairman of Quicken Loans Inc., the venture, Rock Ohio Caesars LLC said in December.
The company bought the Planet Hollywood Resort & Casino from default a year ago, gaining a Las Vegas Strip property next to its other resorts for less than it would cost to build.
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