Land based casino operator Las Vegas Sands surpassed Wall Street’s expectations with its first-half financial results, amidst a recovery in the Macau/Singapore tourist industry.
Las Vegas Sands’ revenue for the third quarter was $2.54bn, a 143% rise compared with the same period last year.
The company reported $3.40 billion in sales for the first six months of the year, an increase of 154.7% from the $1.34 billion total last year.
In 2022, a $290m loss was expected. The revenue increase led to an income of $312m. The total income for H1 was $513m.
The company’s earnings per share was $0.46. The company exceeded the expectations of the market, as the consensus Zacks estimate was $0.45 for earnings per share.
Sands’ adjusted property EBITDA for the third quarter was $973m, according to the company. This is its best performance in 2019.
The company, which generates most of its revenue from Macau operations has benefited greatly from zero-covid’s end in China. This was followed by a rebound in Macau’s tourism from the Chinese mainland.
Tourism and travel for Sands
Robert G Goldstein, Sands CEO and Chairman of the Board said: “We are pleased with the progress made in the first quarter in the recovery in the travel and tourism expenditures in Macao as well as Singapore.”
We are excited to have more guests return to our hotels in 2023, and the future.
The business claims that the number of Macau visitors has reached 70% the level of 2019. Macau welcomed 2,209662 tourists in June. This is an increase of 480% compared to the previous year.
Sands Macau reported an overall $1.63bn for the period of three months ending June 30, a 335 % increase over the $374m recorded last year.
The company’s Singapore Casino Marina Bay Sands also reported an increase of 36% in revenues to $925m.
The property still has the highest revenue of any Sands property. Venetian Macao generated $653m in the same quarter.
Singapore’s prospects are bullish
Patrick Dumont, President and Chief Operating Officer of Sands Corporation (Sands), outlined his company’s thinking on the Singapore market.
He said, “First of all, we are very optimistic about Singapore’s future.”
Dumont said that he was influenced by the financial performance of the previous quarter, customer profiles, China’s continued weakness, and Singapore’s macroeconomic results when determining the outlook for the casino market in the city-state.
The business stated that they would invest in their Marina Bay Sands operation to expand its capacity.
He said, “Right away we are in talks with the government to determine the form that our final project will take.”
Continued recovery in Macau
Macau’s revenue is still below its Q4 total for 2019 of $2.24bn despite the recent recovery. This shows that the Macau market has not recovered to the pre-Covid levels.
Business also pointed out the continued weakness of the economy in mainland China.
Goldstein, however, said that Sands held a more positive outlook on the current market.
He said, “We believe Macao is going to continue growing.” The recovery will depend on the number of visitors in each segment.
He added: “Our story, which is quite simple, is that more visits, and especially more base masses, will result in a larger GGR. We’ll also be the biggest beneficiaries of this.” “I think we do believe that partly.”
Goldstein, who argued that Macau is “special”, said that revenue figures were going in the right directions despite China’s slow recovery.
He said that the summer would be an excellent indicator of how quickly we can get to $26bn. $30bn. $32bn.
Interest on debt costs are increasing
Sands’ total operating costs for the first half of the year were $3.75bn and $2.01bn.
The majority of Sands costs were stable, but the resort operation costs almost doubled to $1.58bn from $842m.
The development costs also increased, but they remained modest in comparison to total revenue. They stood at $54m compared with the $22m spent in 2022.
Sands costs have risen by close to 10 percent on a quarterly scale from $1.74bn in Q1.
Dumont, pointing out the higher costs, said the company would have to improve their customer profile to be successful going forward.
He said that he needed to solve some problems through more valuable customers, better pricing and higher volumes.
Sands also saw a rise in the costs to service its debt during the third quarter, from $162m to $210m. To maintain operations, the operator took on a significant amount of debt in response to the Covid-19 Pandemic.
Total debt as of June 30th 2023 was $14.70 billion.
Sands Digital Strategy: Buyers, not builders
Dumont also explained the company’s digital strategy.
He said that Sands is working on digital offerings, but added that “it’s still early days”. Dumont did make it clear, however, that Sands would invest in its own digital capabilities and not purchase a ready-made solution.
He said, “We are not buyers; we are builders.”
Dumont argued that Sands would commit to the segment’s long-term future.
He added, “Our aim is to ensure that we maintain the highest possible regulatory standards. We only work with partners when it makes sense. And we are very selective.”