Sands China Ltd reported a sharp decline in second-quarter earnings as unusually weak VIP gaming hold, World Cup-related disruption and higher operating costs weighed on its Macau business despite increased gaming volumes across several segments.

For the three months ended June 30, 2026, the casino operator generated US$1.78 billion in net revenue, down 0.8% from the same period a year earlier and 15.6% below the first quarter.

Adjusted property EBITDA fell 24.0% year-on-year and 32.1% sequentially to US$430 million, its lowest level in three years since Macau’s post-pandemic tourism reopening. Net income from the Macau operations declined 50% year-on-year to US$107 million.

The quarter included an exceptionally low VIP rolling win rate of 1.35%, which reduced EBITDA by approximately US$87 million. Adjusting for that impact would have lifted EBITDA to around US$517 million to US$518 million, although analysts said the underlying result still fell short of expectations.

“Property EBITDA of US$430 million was the lowest in three years since [post-Covid tourism] reopening, and even after adding back extremely unfavourable VIP luck,” which had subtracted U$S87 million, “luck-adjusted EBITDA of US$517 million still missed at 5 percent-plus below JP Morgan estimates,” analysts DS Kim, Selina Li and Lindsey Qian stated.

They added: “The challenge is that it is tough to separate signal from noise.”

Low VIP Hold Weighs on Stronger Gaming Volumes

Las Vegas Sands said the Macau business recorded growth in gaming volumes across all segments compared with the previous year, including an all-time high for mass-market gross gaming revenue in May.

Mass-market table drop increased 15% year-on-year, while VIP rolling volume rose 73%. Slot handle increased 30%. Premium mass revenue grew 13%, while grind mass revenue edged up 1%.

Those volume gains did not translate into stronger earnings because of the unusually low rolling hold and weaker conditions during June.

The company described the VIP result as “unusually low hold in rolling play”.

Las Vegas Sands Chairman and CEO Patrick Dumont said in an official announcement [pdf]: “We continued to execute our strategic objectives during the quarter in both Singapore and Macau while continuing to increase the return of capital to shareholders,”

“In Macau, our ongoing investments in enhanced service and hospitality offerings contributed to growth in volumes across all gaming segments as compared to the prior year, although unusually low hold in rolling play negatively impacted our reported financial results for the quarter.

“At Marina Bay Sands in Singapore, we continued to deliver industry-leading financial performance.

“Looking ahead, we remain confident that our people, our products and our focus on delivering outstanding service, hospitality and entertainment experiences to our customers will drive growth for the company and deliver strong returns to our shareholders in the years ahead.”

The operator’s adjusted property EBITDA margin declined to 24.0%, compared with 31.5% a year earlier.

Analysts described the quarter as unusually difficult because several negative factors occurred simultaneously. One assessment called it “a messy quarter” with an “ugly print” where “bad VIP luck, poor mass hold, and bad timing all arrived together”.

The period was also described as being “hit by exceptional VIP luck (the biggest impact ever in 24 years)” and “poor mass hold (the lowest since reopening), and a sizeable [FIFA] World Cup drag”.

Analysts Question Returns From Higher Reinvestment

Attention also turned to Sands China’s increased spending on customer reinvestment and whether those expenditures are producing sufficient earnings growth.

The mass-market reinvestment ratio reached 26.6% during the quarter, increasing 130 basis points sequentially and 340 basis points year-on-year.

Operating expenses were 18% higher than a year earlier.

According to GGRAsia, Morgan Stanley analysts Praveen Choudhary and Anson Lee questioned the return generated by that spending.

‘We don’t see Sands gaining EBITDA share consistently despite intense reinvestment since June 2025,’ the analysts wrote.

They also stated: ‘Macau is challenged by more than the World Cup. It is facing issues of intense competition in premium mass, with less support from base mass.’

Morgan Stanley maintained its Equal-weight rating and estimated annualized hold-adjusted corporate EBITDA at approximately US$2.07 billion, around 8% below the 2026 market consensus of US$2.24 billion.

The brokerage also said: “Operating expenditure is up 18 percent year-on-year,” adding that it remained “concerned about second-half margin for the industry”.

Another assessment took a more constructive view of cost management during the quarter.

“The marginally constructive read is that cost/reinvestment discipline held up better than feared, with operating expenditure up only 1 percent quarter-on-quarter and reinvestment rate flattish quarter-on-quarter, if adjusted for hold” rates.

JP Morgan maintained an overweight position on Sands China “for now”, describing its stance as “not an earnings momentum call, but purely a yield/positioning call: the dividend floor remains significant at circa 8 percent yield on current dividend per share of HKD1.00 [US$0.13] per annum, with potential upside into financial-year 2027”.

Analysts also said the size of the earnings shortfall remained significant, describing the EBITDA “miss” as “too large to ignore”.

Property Results Show Mixed Performance Across Macau

Performance varied across Sands China’s individual properties.

The Venetian Macao recorded total revenue of US$591 million, down 10.9% year-on-year. Casino revenue fell 12.8% to US$457 million, while adjusted property EBITDA declined 30.1% to US$165 million.

The Londoner Macao produced a stronger revenue performance. Total revenue increased 10.6% year-on-year to US$710 million, although it declined 5.8% from the previous quarter. Casino revenue rose 10.7% to US$548 million.

The Londoner’s adjusted property EBITDA fell 6.3% to US$192 million, allowing it to surpass The Venetian Macao on that measure for the first time.

The Parisian Macao posted a 12.4% increase in net revenue to US$218 million, while casino revenue grew 15.4% to US$165 million. Adjusted property EBITDA slipped slightly to US$38 million.

The Plaza Macao and Four Seasons Macao recorded a 29.4% decline in net revenue to US$137 million, while Sands Macao saw net revenue fall 33.8% to US$95 million.

Analysts will continue watching whether weakness among higher-value customers proves “temporary or more persistent, not only in VIP but also in premium mass,” after premium-mass activity declined 11% quarter-on-quarter and base mass fell 1%.

Sands China’s headline gross gaming revenue share was reported at around 23.7% to 23.8% in the supplied post-results assessments, representing a substantial sequential decline. The company separately reported that its mass-market GGR share increased by 100 basis points year-on-year to 25.0%.

Management expects expense pressures to ease later in 2026.

“Operating expense growth, driven by extended table operating hours and incremental sales and service headcount, is… expected to moderate in the second half of 2026, supporting a recovery in EBITDA margins as top line growth continues.”

Sands China is also continuing the renovation of hotel rooms at The Venetian Macao, with management targeting completion of all 2,900 upgraded rooms ahead of Chinese New Year 2028.

The company is expected to publish its full first-half 2026 results and propose an interim dividend per share in mid-August.