Las Vegas Sands Posts Profit as Macau Visitors Rise (Update1)
By Beth Jinks
May 6 (Bloomberg) -- Las Vegas Sands Corp., the casino company controlled by billionaire Sheldon Adelson, reported an unexpected first quarter profit, excluding some items on a rise in Macau visitors and a reduction of costs.
The company reported adjusted profit of $8.9 million, or 1 cent a share, beating the 2.5-cent average loss projected by 11 analysts surveyed by Bloomberg.
Chief Executive Officer Adelson has targeted $470 million in annual savings as Las Vegas works through the worst slump on record. MGM Mirage, the largest casino operator on the Strip, said yesterday that convention cancellations had slowed and occupancy recovered in April. Wynn Resorts Ltd. Chief Executive Officer Stephen Wynn said he saw improving booking trends and stronger weekends.
Macau casino operators? ?fundamentals are getting better, gaming revenue is improving, tourism arrivals are OK, and there are some hopes visa restrictions may be removed,? JPMorgan Chase & Co. analyst Billy Ng said in a phone interview today. People from mainland China, the biggest source of tourists for Macau, need a visa to enter the city, the only place in the country where casino gambling is legal.
Melco, SJM, Galaxy
Melco International Development Ltd., controlled by the son of billionaire Stanley Ho, led Hong Kong-listed casino stocks higher today, climbing as much as 20 percent to HK$5.49, the biggest intraday advance in more than a month. Melco traded at HK$14.22 at 3:33 p.m. Hong Kong time.
Stanley Ho?s SJM Holdings Ltd. rose as much as 14 percent to HK$2.77 and Galaxy Entertainment Group Ltd., controlled by billionaire Lui Che-woo, gained as much as 19 percent to HK$2.40.
?We have had a sequential increase, and the trend upward has been established,? Adelson said yesterday on a conference call, referring to month-on-month Las Vegas performance. ?We hope it accelerates starting after the summertime.?
Las Vegas table-gaming trends ?improved notably in March,? Las Vegas Sands said yesterday.
Convention booking rates ?look pretty good? from the fall, and clients aren?t seeking substantial discounts, Adelson said.
Las Vegas Sands, MGM Mirage and Wynn Resorts Ltd. surged yesterday in regular trading on optimism the worst slump on record in Nevada may be easing.
Job Cuts
Las Vegas Sands has cut worker hours and jobs to trim costs after skirting potential defaults last year. Adelson shelved a condominium development on the Las Vegas Strip and stopped construction in Macau in November as the recession, credit freeze and Chinese visa curbs hit gambling revenue.
The net loss was $34.6 million, or 14 cents a share, compared with a loss of $11.2 million, or 3 cents, a year earlier, the company said. On an adjusted basis, year-ago profit was $23.6 million, or 7 cents a share.
Visits to Sands? Venetian Macao jumped 14 percent to more than 6 million in the first quarter from a year ago. Gambling revenue at the casino rose 7.8 percent in the quarter. Adjusted Ebitdar rose 10 percent to $121.5 million. Revpar fell 8.7 percent to $167.
At the Sands Macao, adjusted Ebitdar fell 23 percent to $50.4 million.
The company?s makes more than twice as much revenue in Macau than it does in Las Vegas.
Potential Investors
Adelson yesterday repeated he?s in talks with potential minority investors in Sands? Macau casinos. The casino operator is also evaluating bids for two shopping malls within its Macau project.
Discussions continue with construction companies that have expressed interest in investing to finish building phases five and six of the company?s stalled $12 billion Macau project. Adelson ?hopes? to resume work this year on the development, which includes Shangri-La and St. Regis hotels, apartments, a casino and mall. It was mothballed in November amid frozen credit markets.
In Las Vegas, adjusted earnings before interest, tax, depreciation, amortization and rent, or Ebitdar, fell 27 percent in the quarter to $89.8 million from a year earlier.
Las Vegas slot-machine gambling revenue dropped 14 percent to $705.9 million in the first quarter from a year ago. Table- game betting fell 2.7 percent to $444.4 million, while the casino ?hold,? or the amount the casino won, fell to 21 percent of the amount gambled, from 26 percent.
The revenue Sands gets for each available room at Venetian Las Vegas, a measure of rates and occupancy called Revpar, fell 25 percent in the quarter, to $187. Neighboring Palazzo, which opened in December 2007, had Revpar of $204, a 5.7 percent increase from last year.
Las Vegas Strip casino gambling revenue tumbled 23 percent in February, and 15 percent in January, extending last year?s 11 percent drop, the worst annual decline on record. Passenger traffic at Las Vegas? McCarran airport fell 14 percent in the three months through March.
To contact the reporter on this story: Beth Jinks in New York at bjinks1@bloomberg.net
Last Updated: May 6, 2009 03:49 EDT
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