Asian market fuels record revenue for Las Vegas Sands Corp.
27 October 2011
In a conference call with investors today, Las Vegas Sands Chairman Sheldon Adelson promised to send “egg-wiping face towels” to analysts who doubted the projections he made for the company’s properties in Macau and Singapore.
What prompted the comment? A report showing that the company, capitalizing on its strength in Asia, posted record third-quarter revenue. Company executives said they saw nothing to alter that trend in the immediate future, either.
Las Vegas Sands Corp. reported net earnings of $444.8 million, 55 cents a share, on revenue of $2.41 billion for the quarter that ended Sept. 30. A year ago, the company reported earnings of $265.2 million, 34 cents a share, on revenue of $1.91 billion. Analysts had projected earnings per share of 52 cents for the quarter.
Expenses attributed to the Las Vegas-based company’s operation of a ferry operation and pre-opening expenses on a new Macau property knocked earnings down to $424.9 million, 44 cents a share.
“Very few believed in its potential,” Adelson said of Macau’s Cotai Strip area. “Now, everybody wants to be there. It’s the most coveted real estate in our industry.”
Adelson and his management team are confident the company — which operates the Venetian and Palazzo properties on the Strip — can sustain its financial pace because the mass market in Macau continues to grow, nongaming amenities are flourishing and the company will open 1,800 more hotel rooms in five months with its Cotai Central development. When completed, the Cotai Central area will have 5,800 rooms.
Adelson poked fun at himself because he underestimated Macau’s potential, telling analysts that he would take one of the egg-wiping towels himself.
“I’ll suffer through the indignity of being wrong,” he said.
In Singapore, the company’s iconic Marina Bay Sands — which Adelson called “the eighth wonder of the world” in the conference call — is continuing to mature. The property had record cash flow and margins thanks to record high-roller, mass market and slot play. Executives expect even better results in the future because slot hold was below projected averages for the quarter.
Beyond those two destinations, Adelson said he expects either Korea or Japan to consider casino industry growth.
“Korea and Japan are getting louder about moving in the direction of legalizing casino gaming in integrated resorts,” Adelson said. “If one of them legalizes it, the other will legalize it in a heartbeat. And we’ll be there. We created the concept of the integrated resort.”
Although the results were greatly overshadowed by the Asian properties, company officials said cash flow at the Venetian and Palazzo in Las Vegas increased by 61.7 percent over last year’s third quarter, thanks to a strong table-game drop led by baccarat play.
The company said the Las Vegas properties had a 92.7 percent occupancy rate and third-quarter revenue per available room was up 8.6 percent, thanks to healthy tourist and convention business and an average daily room rate of $191.
The Las Vegas properties had net revenue of $347.4 million, a 19.5 percent increase over third quarter 2010, and local promotional expenses were reduced.
Adelson said his company’s board of directors may consider a steady dividend policy — which would improve his personal fortunes since he holds more than half the shares.
“I know my wife would like to see dividends. So would my children,” Adelson said. “Maybe I’d be able to get a new plane or something bigger than the boat I have.”
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