Las Vegas Sands Losses Narrow: Macau 80% of Revenue

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(Bloomberg) -- Las Vegas Sands Corp., the casino company expanding in Macau and Singapore, reported fourth- quarter earnings that met analysts' estimates as growth in the Chinese gambling market countered a U.S. slump.

Excluding some items, profit totaled 3 cents a share, the Las Vegas-based company said today in a statement, matching the average estimate of 15 analysts surveyed by Bloomberg. The company posted a net loss of $113.9 million compared with a loss of $136.5 million a year ago.

Macau accounted for about 80 percent of revenue in the quarter, as billionaire founder and Chief Executive Officer Sheldon Adelson invests in Asia to take advantage of record betting in the only part of China where casinos are legal. That helped counter a decline on the Las Vegas Strip, where resorts have slashed prices in response to a record two-year drop in corporate meetings and gambling.

"Gaming volumes at Venetian Macau showed a healthy increase," said Karen Tang, a Hong Kong-based analyst for Deutsche Bank AG who recommends buying the shares of Las Vegas Sands' Macau unit. Sands Macau Ltd. "is the biggest beneficiary of strong Chinese New Year visitor inflows into Macau," Tang said in a note to clients today.

The Venetian Macao, the casino operator's biggest resort, almost doubled operating income on the quarter as betting on table games and slot machines climbed.

Las Vegas Sands $1.01, or 5.8 percent, to $16.45 in extended trading after the announcement. The stock dropped 10 cents to $17.46 at 4 p.m. in New York Stock Exchange composite trading.

Macau Performance

"The performance in Macau provides strong momentum as we resume construction activities," Adelson said on a conference call, reiterating plans to complete the mothballed Shangri-La, Traders and Sheraton hotels on the Cotai Strip by 2012. In Las Vegas, "group business is returning" in volume this year, he said.

Sales rose 17 percent to $1.28 billion from $1.09 billion, beating the $1.24 billion average estimate of analysts. Las Vegas cash flow, measured as adjusted property earnings before interest, taxes, depreciation, amortization and rent, fell 36 percent to $56.9 million and in Macau jumped 48 percent to a record $251.5 million.

Sands China raised $2.5 billion last year in a Hong Kong initial public offering and convertible bond issue to repay loans and resume construction in the city, the world's biggest gambling hub.

Overall gross revenue at Macau's casinos increased 10 percent in 2009 to a record of more than 119 billion patacas ($14.9 billion), according to government data.

‘Relentless' Pressure

While Las Vegas gambling revenues have "stabilized" and business group bookings are recovering, competitive pressure to lower room rates is "pretty relentless," executives said today on the conference call. That may cause revenue per available room, or Revpar, to decline slightly this year, Chief Operating Officer Michael Leven said.

Table-game betting at the company's two Las Vegas resorts was little changed at $508.8 million, while Sands' hold or win fell to 17 percent from 20 percent a year ago. Slot-machine gambling declined 31 percent.

Revpar at the Venetian in Las Vegas fell 19 percent and dropped 17 percent at the neighboring Palazzo, as both occupancy and rates declined.

Las Vegas Sands will open the first phase of its Singapore casino resort in late April and have an official opening in June, the company said today. Marina Bay Sands near the city-state's financial district will follow Genting Bhd., which opened Singapore's first casino Resorts World Sentosa on Feb. 14.

Beth Jinks

Business/Financial News

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