Las Vegas Sands profit falls 65pc despite Venetian's pulling power
Casino operator Las Vegas Sands Corp, which operates two mega-casino resorts in Macau and is spending up to US$14 billion developing a dozen more in the enclave, said fourth-quarter profit fell 65 per cent on higher operating costs, development expenses and accounting charges.
Nevertheless, revenue at the world's largest gaming company by market value surged 65 per cent to US$1.05 billion for the quarter, following the August 28 opening of the Venetian Macao, the company announced. The US$2.4 billion mega-hotel-casino booked US$500.4 million in sales during its first full quarter, becoming the group's biggest revenue contributor.
The Venetian Macao won back 2.72 per cent of the US$12.34 billion in VIP gaming chips it sold, below the group's ambitious target of 3 per cent but still above the industry standard of 2.4 per cent. The Sands Macao, the group's other casino that opened four years ago, sold US$5.92 billion of VIP chips. Their combined sales made up an estimated 24 per cent of Macau's high-roller market.
In response to stiff competition in the VIP market, which in Macau is controlled by junket agents who bring in players, Las Vegas Sands management said yesterday it would raise commission payments for junkets by about 10 per cent this month.
The new programme switches to a revenue-sharing model but retains some performance-based commissions on chip sales and makes up about 1.22 per cent of chip sales under normal circumstances, compared to the base 1.1 per cent the Venetian previously offered.
Las Vegas Sands executives said the Venetian Macao had received nine million visitors since its opening. The resort now has 270 stores open in a commercial mall with space for 350, compared with about 120 on the opening day.
Hotel occupancy at the 3,000-room resort stood at 88.1 per cent during the quarter and rates averaged US$224 per night for total hotel revenue of US$51.3 million. Food and beverage sales amounted to US$17.6 million. The 848-table Venetian casino booked mass-market table winnings of US$150.27 million while slot machine revenues were US$30.45 million, or US$111 per machine per day, from 2,988 total units.
At the 632-table Sands, mass-market table winnings were US$148.42 million with daily revenue per slot machine of US$139 at its 1,457 machines.
Despite solid casino performance, increased costs related to construction in Macau, Singapore and the United States, coupled with higher depreciation, amortisation and interest charges, pushed net earnings down 65 per cent to 20 US cents per share, from 37 US cents a year ago.
The bottom line was 42 per cent lower than the 34.6 US cents per share forecast by a Bloomberg survey of analysts.
Shares in Las Vegas Sands have fallen 21 per cent this year and 43.6 per cent from their October peak, following a general sell-down of gaming stocks. They shed 7.2 per cent before Monday's results announcement to close at US$81.45 each.
