Net income declined 4.3% to $669 million in the third quarter

Sands reports "limited" impact from Hong Kong protests, wants to invest more in Macau

Sands is spending an estimated $2.2 billion on new construction and renovations in Macau.
2019-10-24
United States
Reading time 2:36 min
With Chairman Sheldon Adelson returning Wednesday to the earnings call, the company reported net revenues down by 3.6% to $3.25 billion in Q3. The Las Vegas Strip operations accounted for only about 10% of earnings before factoring in costs over the previous 12 months, while Macau accounted for 60% and Singapore about 30%.

Las Vegas Sands Corp. reported Wednesday net income of $669 million for the three months ended September 30, a 4.3% decline from the year-earlier period. Net revenues declined 3.6% to $3.25 billion, and operating income decreased 2.5% to $899 million. 

"We delivered solid financial results in the quarter, with Adjusted Property EBITDA reaching $1.28 billion," said Sheldon G. Adelson, chairman and chief executive officer, present at the conference call after a nearly yearlong absence due to an undergoing treatment for non-Hodgkin lymphoma earlier this year, according to the company.

"We remain enthusiastic about our future growth opportunities in Asia. Next year, we will introduce approximately two million square feet of luxurious suite accommodations on the Cotai Strip with the opening of the Grand Suites at Four Seasons Macao and The Londoner Tower Suites. Additional tourism and entertainment amenities of The Londoner Macao will debut throughout 2020 and 2021. Looking further ahead, the expansion of Marina Bay Sands in Singapore will expand our suite capacity by 40% and introduce a state-of-the-art entertainment arena, both of which should contribute to growth in the future. We are also aggressively pursuing additional development opportunities in new markets, including in Japan,” Adelson added.

Asked Wednesday about recent political unrest in Hong Kong, Sands President and Chief Operating Officer Robert Goldstein indicated that the impact on the company so far has been limited, The Wall Street Journal reports. Like other gambling giants, Sands derives the majority of its revenue from Macau, which neighbors Hong Kong. In Macao, Adjusted Property EBITDA was $755 million.

The company’s Las Vegas Strip operations, including the Venetian resort, accounted for only about 10% of earnings before factoring in costs such as interest, taxes and depreciation, over the previous 12 months. Macau accounted for 60% and Singapore about 30%. Goldstein said Macau has proved to be a resilient market, built on a large percentage of younger, affluent customers.

Sands is spending an estimated $2.2 billion on new construction and renovations in the gambling hub. They include $1.35 billion on a renovation and expansion at the rebranded Londoner Macau, $400 million on a separate 370-suite Londoner Tower Suites and $450 million on a hotel tower at the Grand Suites at Four Seasons Macau. We want to invest more money in Macau,” Goldstein said.

Casino operators in Macau face a deadline of June 2022, when their 20-year concessions, or licenses, expire unless the government extends the agreements. Meanwhile, Japan recently legalized casinos last year, opening the way for companies like Sands and MGM Resorts International Inc. to pursue developments there, including casino, hotel, retail and meeting spaces.

In August, Sands said it is focusing on opportunities in the cities of Tokyo and Yokohama, after initially pursuing Osaka. Goldstein said development costs for a Japanese location could exceed $10 billion, widely considered in the industry the minimum price.

Sands entered a development agreement with the Singapore government for a $3.3 billion expansion of its Marina Bay Sands property, continuing the company’s focus on Asia. The project includes a 1,000-suite tower and entertainment arena.

In Las Vegas, hotel room revenues were up 4.3% and slot machine win increased 3.4%. Like other Las Vegas casinos, the company identified conventions and meetings and entertainment as key areas of growth on the Strip.

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