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LAS VEGAS, Nev. - Las Vegas Sands Corp.'s success continued in Macau, helping it more than double its net income in the second quarter. But growth was tepid in Las Vegas, and Wall Street expected stronger results overall.
Revenue rose 40 per cent at Sands China, the company's Macau division, while profit more than tripled. Known for its high-roller gamblers and a growing base of middle-class Chinese visitors, Macau is the world's largest gambling market and the only place in China where casino gambling is legal. Sands was the first U.S. company to enter the market after China opened it to foreign businesses in the early 2000s.
Speaking with analysts and investors Wednesday, billionaire CEO Sheldon Adelson brushed off concerns that the Macau juggernaut might one day peter out as economic growth slows in China.
"Consumer behaviour is going in the right direction, as far as we're concerned. We have more people coming in spending more money," he said.
Revenue at Sands' flagship Asian casino, the Venetian Macao, rose 38 per cent, helped by a 43 per cent growth in gambling revenue. Spring and summer visitors to Sands' five Macau properties grew 40 per cent compared with a year ago.
But revenue per available room, known as revpar, a key industry metric, fell 1 per cent at the Venetian Macao from a year ago.
Adelson, whose success in Macau has made him the ninth-richest person in America, according to Forbes, said he expects far more visitors in the years to come.
"It's the infrastructure that is holding up a tremendous increase in potential attendance," he said. "The further out the tentacles reach with high speed rails, the more visitation."
Sands, the largest U.S. casino company, has other problems in Macau aside from worries about economic growth slowing.
The company is under investigation by the Department of Justice and the Securities and Exchange Commission. The inquiries stem from a pending wrongful-termination case brought by a former Sands executive who claims that Sands' China subsidiary did business with known gangsters, tacitly condoned prostitution and made inappropriate payments to an attorney who was also a Macau lawmaker. Sands has denied all claims, but recently said in a regulatory filing that an examination of its books had turned up possible breaches of a federal anti-corruption act.
In the U.S., sales rose less than 6 per cent at the company's two Las Vegas casinos, the Venetian and the Palazzo.
The company said spending on food and drinks in its Las Vegas Strip properties fell 2 per cent, while gambling revenue, buoyed by the Asian favourite baccarat, rose by 11 per cent. Revpar rose 7 per cent.
The U.S. gambling industry has struggled to bounce back from the recession, with casinos regaining strength more slowly than the rest of the economy. As the U.S. industry has faltered, China has become a larger portion of Sands' business.
The company also operates the Sands Bethlehem in Pennsylvania and the Marina Bay Sands in Singapore.
Executives acknowledged that gamblers in Singapore are beating the house more than they would like, but, citing the law of averages, they said they expected the players' good luck would dissipate over the long run.
"The cards don't know how much money is being bet on them," Adelson said.
Sands said Wednesday that it earned $529.8 million, or 64 cents per share, up from $240.6 million, or 29 cents per share. Revenue grew 26 per cent to $3.24 billion.
Adjusting to exclude one-time items, it earned $540.6 million, or 65 cents per share, up from $365.3 million, or 44 cents per share.
Analysts were expecting 68 cents per share in adjusted earnings on $3.3 billion in revenue, according to FactSet.
Las Vegas Sands' stock fell 42 cents to $54.53 in aftermarket trading. It's gained 19 per cent this year.
Hannah Dreier can be reached at http://twitter.com/hannahdreier
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