Costs, weaker economy drive Las Vegas Sands to 1Q net loss
LAS VEGAS—Las Vegas Sands Corp. said Wednesday it lost $11.2 million in the first quarter as resort construction costs escalated, the U.S. economy weakened and competition intensified in the Chinese gambling enclave of Macau.
Shares of the casino company run by billionaire Sheldon Adelson fell 9 percent in after-hours electronic trading.
The company's quarterly loss equaled 3 cents per share, compared with a profit of $90.9 million, or 26 cents per share, a year earlier.
Excluding items such as losses on sold assets and expenses related to opening new casinos, adjusted earnings totaled $23.6 million, or 7 cents a share for the period ended March 31. That was down from $114.6 million, or 32 cents per share, a year earlier.
Analysts surveyed by Thomson Financial predicted earnings of 36 cents per share for the latest quarter.
Sands said quarterly revenue increased 72 percent to $1.08 billion from $628.2 million a year ago, boosted by new casinos. Analysts expected revenue of $1.24 billion.
Las Vegas Sands shares fell $6.87 in after-hours trading. The shares had gained $2.39, or 3.2 percent, to end the regular trading session at $76.22 before the results were released.
"While we remain pleased with our progress in the steady execution of our global growth strategy, our first-quarter operating results reflect both an intensely competitive operating environment in Macau as well as a weaker economic environment here in the United States," William Weidner, Sands president and chief operating officer, said in a statement.
The Las Vegas-based company owns The Venetian Resort & Casino and the newly opened adjoining Palazzo resort on the Las Vegas Strip. In the booming Chinese territory, it owns the Sands Macao and Venetian Macao.
On a conference call with analysts, Weidner said the company "paid the price" in the first quarter for an earlier decision to increase inventory for tourists rather than conventioneers in 2008.
Tourism traffic in Las Vegas has suffered in a weakening economy, and the company saw "lower occupancy than we planned," Weidner said.
Net revenue at the company's Las Vegas properties rose 21 percent over the previous year to $351.6 million.
In China, net revenue at the Sands Macao dropped 23 percent to $268.3 million, while the Venetian Macao, which opened in August, posted net revenue of $455.7 million.
Weidner said the company saw a significant loss of market share among high rollers in Macau. Competition increased in December when MGM Mirage Inc. opened its first venture in the enclave, MGM Grand Macau.
Weidner said Sands plans to increase its credit to VIPs to win back those gamblers and hopes to soon ramp up 24-hour ferry service from Hong Kong to increase traffic.
Las Vegas Sands is investing $12 billion to $14 billion to build 20,000 hotel rooms by 2010 on an area of reclaimed land in Macau called the Cotai Strip.
It also plans to open the $1.4 billion Marina Bay Sands in Singapore and the $600 million Bethworks Casino in Pennsylvania next year.
It opened the $1.9 billion Palazzo in Las Vegas in January.
The company said the Four Seasons Macao, adjacent to the Venetian Macao, was on track to open in July.
Adelson and Weidner said they remain bullish on Sands' success in Asia, particularly in light of recent comments from Macau's leader.
Edmund Ho told Chinese lawmakers last week that no new casino concessions or sub-concessions would be issued in the foreseeable future, and additional slot and table games would be limited.
Projects already approved, including Sands' developments, won't be affected, Weidner said.
Adelson said he believed the announcement was a reaction to pressure from Sands and others wanting to discourage proliferation of smaller casinos and encourage development of large destination resort-style properties.
"Our goal is to turn a city of seedy, backwater gambling dens into a city of convention business travel and business and leisure travel," Adelson said. "I think we're speaking to welcome ears when we're suggesting that you got to have to have a certain percent of exhibition space, convention center, shopping space."
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AP Business Writer Jennifer Malloy in New York contributed to this report.
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