Strong Singapore, poor Macau: LVS 4Q results
U.S.-based casino operator Las Vegas Sands Corp posted a net income increase of 25 percent in the fourth quarter of 2014, to U$721.3 million, in comparison with the prior-year period, the company announced on Wednesday. The strong performance, beating analysts’ estimates, was fuelled by the firm’s operations in Singapore.
Group diluted earnings per share in the fourth quarter of 2014 increased 28.6 percent to US$0.90, compared to US$0.70 in the prior year quarter.
In full year 2014, net income attributable to Las Vegas Sands increased 23.2 percent to US$2.84 billion, or US$3.52 per diluted share, compared to US$2.31 billion, or US$2.79 per diluted share in 2013.
Las Vegas Sands is the parent company of Marina Bay Sands Pte Ltd, the owner and operator of casino resort Marina Bay Sands, in Singapore. The U.S.-based firm is also the parent of Sands China Ltd, which controls several casino properties in Macau.
In Singapore, the company’s adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) doubled to US$518.5 million during the fourth quarter, “reflecting strong growth in mass gaming and retail mall revenues, and the positive impact of a US$90.1 million property tax refund during the quarter,” Las Vegas Sands said in a press release.
The Singapore property’s mass gaming win-per-day increased 4.1 percent in the quarter compared to the year ago quarter, matching a property record US$4.82 million per day.
On a GAAP basis (generally accepted accounting principles – the standard for U.S.-based firms), the Macau unit of Las Vegas Sands posted a 16.2-percent drop in total net revenue to US$2.12 billion in the fourth quarter of 2014.
Net income for Hong Kong-listed Sands China decreased 18.3 percent to US$535.3 million in the fourth quarter, compared to the year-prior period.
On a GAAP basis, full-year 2014 total net revenues for Sands China increased 6.8 percent to US$9.57 billion. Adjusted property EBITDA for Sands China increased 12.4 percent to US$3.26 billion in 2014 and net income rose 15.4 percent to US$2.55 billion in 2014.
Still confident in Macau
“The Macao market saw strong visitation from mainland China during the quarter, and we enjoyed equally strong visitation to our Cotai Strip properties,” Las Vegas Sands chairman and chief executive Sheldon Adelson (pictured) said in a statement. “We welcomed over 17 million visits to our Macau property portfolio, and delivered meaningful growth in the non-gaming segments of our business.”
He added: “Notwithstanding a challenging environment in the VIP and premium mass gaming segments, we delivered US$711.2 million in adjusted property EBITDA across our property portfolio.”
Mr Adelson is scheduled to take over the role of chief executive in Sands China, replacing current CEO Edward Tracy, who is retiring in early March, according to a Sands China filing on January 16.
Market-wide in Macau, gross gaming revenue (GGR) has dropped for seven consecutive months measured on year-on-year terms. Many investment analysts covering the sector expect Macau’s GGR decline to continue at least during the first half of 2015.
Despite the Macau slump, Mr Adelson said the firm remains “confident” about the market.
Commenting on Sands China’s results, UBS Securities Asia Ltd’s analysts Anthony Wong and Angus Chan noted that Sands China property EBITDA was 2.6 percent below their US$731 million estimate.
They added: “We believe margins are slightly weaker than expected, especially at the Venetian [Macao casino resort]; while non-gaming revenues were also slightly below expectations.”
Deutsche Bank AG analyst Karen Tang also noted that Sands China’s results were below analysts’ consensus. “For 2015, we forecast Sands China EBITDA to fall 16 percent on falling revenue but rising costs,” she added.
Parisian only in 2016
Sands China is currently building a new casino resort in Macau’s Cotai district – its fourth there – called the Parisian Macao. In a conference call after the results announcement, management said the new property is expected to open “some time in 2016”. Ms Tang noted that “is a departure from ‘late 2015/early 2016’ mentioned in previous calls.”
Company-wide (including the company’s operations in the United States), Las Vegas Sands’s net revenue for the fourth quarter of 2014 decreased 6.6 percent to US$3.42 billion, compared to US$3.66 billion in the fourth quarter of 2013.
Operating income in the fourth quarter of 2014 increased 15.4 percent to US$1.02 billion, compared to US$886.1 million in the fourth quarter of 2013.
Full year 2014 net revenue for Las Vegas Sands increased 5.9 percent to a record US$14.58 billion, compared to US$13.77 billion in 2013. Operating income increased 20.3 percent to US$4.10 billion in 2014. “The increase in operating income was principally due to stronger operating results across our Macau property portfolio and at Marina Bay Sands,” the company said.
The company also announced that its next recurring quarterly dividend of US$0.65 per common share will be paid on March 31, to shareholders of record on March 23. That dividend represents an increase of 30 percent compared to the dividend paid in the first quarter of 2014.
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