A series of cost-cutting initiates put in place as part of its impending merger with Eldorado Resorts, including the decision to withdraw from bidding to develop an integrated resort in Japan, has already saved Caesars Entertainment Corp up to US$100 million, its CEO said on Wednesday.
Discussing the impact of Caesars’ cost-cutting measures during its 3Q19 earnings call, Tony Rodio pointed to the company’s decision to halt most of its international expansion plans – primarily Japan but also opportunities in Greece and on Australia’s Gold Coast – as a key factor in streamlining the business ahead of a shareholder vote on the merger next week.
“On the last quarterly call I mentioned that it was my goal to take US$25 million to US$50 million worth of costs out of the business by the time we got to the closing of the transaction,” Rodio said. “I’m happy to say today that I would now make that estimate somewhere between US$75 million to US$100 million and I think it’s going to be on the higher end of that.”
Rodio noted that Caesars has now “suspended our international efforts and pursuits for licenses in Japan and other jurisdictions” alongside reducing the use of consultants, outside contractors and professional services. Around 50 corporate staff have also taken advantage of the company’s voluntary severance program, Rodio said.
There was no mention during the call of Caesars Korea, the company’s US$700 million IR in Incheon of which development is already well underway.
Caesars reported a 2.3% increase in net revenues to US$2.24 billion and 5.8% rise in Adjusted EBITDA to US$635 million in 3Q19, driven by 6.9% revenue growth at its Las Vegas properties to US$973 million.
However, recognition of US$380 million in impairment charges related to land and buildings at the Rio – which Caesars recently agreed to sell – saw the company fall from an operating profit of US$232 million in 3Q18 to a loss of US$68 million this time around.
Shareholders of both Caesars and Eldorado are due to hold separate votes on the planned US$17.3 billion merger of the two companies next Friday 15 November.