Las Vegas Sands is confident about its potential for long-term growth in Macau, despite the fact that visitation levels are still far below those of the pre-pandemic period. The operator has reported revenue increases both within the Macau region and throughout its entire business.
Group revenue for the three months to 30 June was $2.76bn (PS2.14bn/EUR2.54bn). Sands’ Q2 revenue of $2.54 billion (PS2.14bn/EUR2.54bn) was up by 8.6% but still short of the consensus expectations.
Sands’ revenue increased in each segment, and both Macau and Singapore operations. Macau casinos generated the highest revenue, $1.75bn – up 7.7% on $1.63bn in 2013.
Venetian properties accounted for $686m of its revenue, followed by the Londoner (444m), the Parisian (265m), the Plaza and Four Seasons (250m) and Sands Macau (205m). Another $30m was generated by ferry operations, other activities and business.
Sands Macau: Sands Macau visitors’ concerns
Sands reported lower numbers of visitors in Macau in its earnings report, despite revenue growth in Macau. The operator is unsure why Macau’s visitor numbers were two million lower quarter-on-quarter.
Grant Chum, CEO of Sands China, said that the visitation rate recovery has decreased. When you take into account seasonality, the recovery rate for visitation compared to second quarter 2019 is about 79%.
However, in the last six months and the previous two quarters we had as much as 85%-90%. There has, in my opinion, been more to the slowdown than a simple seasonal one. “We don’t exactly know why.”
Robert Goldstein, Group CEO, also expressed concerns about visitors, saying that if this trend continued throughout the year Macau would lose up to eight million tourists a year.
Longer term, however, he is still optimistic about the growth potential of Macau. Sands’ future in Macau is also brighter as the group nears completion of its Londoner, which has impacted the margins in Q2.
Goldstein stated that “we remain confident” in Macao’s future growth. I believe Macau’s gross profit revenue for next year will surpass $30 billion and that it will continue to increase year-after-year.
Singapore is improving every day
In Singapore, revenues increased by 9.8% and reached $1.02bn. The operator only has one property in Singapore: Marina Bay Sands.
Singapore was discussed in a much more positive way on the earnings conference call. Goldstein even went so far to claim that the overall market is strong and improving “every day”. Sands is planning to offer tower gaming for the very first time at Marina Bay Sands. These services will be launched in Q3.
Goldstein stated that “in the past Q2 has been one of the worst quarters for seasonality.” But what’s happening in Singapore, is still almost unprecedented in our industry. The market in Singapore is booming and growing.
Increased revenue offsets increased costs
Casino activity generated 2,04bn in revenue, an increase of 9.3%. Room revenue grew 5.7%, to $313m. Food and beverage revenues climbed 3.5%, to $148m. Mall sales rose 1.2%, to $174m. Convention, retail, and other revenues jumped 31.9%, to $91m.
Resort operations accounted for the majority of expenditures, at $1.69 billion, an increase of 8.2%. Sands reported $95m of net finance costs, leaving $496m pre-tax profits, which is an 18.9% increase.
Sands had to pay $72m of income tax. After subtracting $71m from income from noncontrolling interest, the company ended up with a $353m net profit, an increase of 13.1%.
Results are stronger than H1
Analyst expectations after Q1’s impressive performance were greater than the actual results. The H1 numbers show a much higher growth rate. Group revenue increased by 22.7% in H1 compared to the same period last year. Macau’s revenue for the period of six months increased by 22.6%, to $3.57bn. Singapore revenues also grew 22.6% in this time frame to $2.17bn.
The total casino revenue for H1 increased 25.3%, to $4.26 billion. Rooms revenue grew 19.3%, to $643m. Food and beverage revenue jumped 11.6%, to $298m. Mall revenue climbed 4.2%, to $348m. Convention, retail, and other revenue soared 41.2%, to $168m.
Net finance costs reached $482m, while operating expenses rose 17.8% to $4.41bn. The result was a $1.10bn pre-tax gain, an increase of 79.1% on the previous year.
Sands has paid $89m tax, and $160m of income from non controlling interests was discounted. Total net profit was $847m for six months, an increase of 84.5%.
Goldstein stated that “Our financial results and operating results in the second half of 2024 show growth both in Macao as well as Singapore, compared with the second half of 2023.” Goldstein said, “We are excited about the opportunities we have to achieve industry-leading growth on both Macao as well as Singapore in years ahead.
Sands has its sights set on Thailand, Texas, and New York?
Sands has taken a major step in securing the lease of its New York Casino site on Long Island at Nassau Coliseum. The company is among 11 other bidders for the three licenses to operate casinos in downstate New York.
Patrick Dumont, Sands’ president and COO, said that the company was spending a great deal of time in New York City and Texas where Miriam Adelson has acquired a majority interest in the Dallas Mavericks. He also spoke highly about Thailand’s planned integrated resorts.
Dumont thinks the Thai government’s legalisation of casinos is an interesting market for Sands.
He said that the market was very good for all types of tourism. It could be a very good opportunity for us, depending on how it is set up.
We are waiting to see what will happen.
