A record performance in Macau in the third quarter of 2009 couldn’t prevent Las Vegas Sands Corp recording a 282 percent increase year on year in the net loss attributable to common stock shareholders
LVS said the net loss reflected in large part an increase in income tax expense of USD73.7 million, or USD0.11 per diluted share, contributing to a USD123.0 million net loss for shareholders compared to a USD32.2 million loss across the group in the third quarter of 2008.
Other factors affecting net loss for shareholders were the company’s significant depreciation and amortisation expenses relating to its expansion at home and in Asia.
Depreciation and amortisation expense was USD148.7 million in Q3 2009, compared to USD132.2 million in the third quarter of 2008. The rise was principally driven by increased depreciation related to the openings of the Four Seasons Macao and Sands Bethlehem in Pennsylvania, said the company.
Interest expense, net of amounts capitalised, was actually down—USD88.5 million for Q3 ’09, compared to USD90.5 million during Q3 2008. Average borrowing cost in Q3 ’09 was also down at 3.8 percent, compared to 5.6 percent in Q3 ‘08. Capitalised interest was USD16.9 million during Q3 ‘09, compared to USD38.4 million during Q3 ‘08.
Sheldon Adelson, the company’s Chairman and Chief Executive, said overall results were held back not only by the generally sluggish performance of the US market, but also by an unlucky streak for the Las Vegas operation. An unusually low table games hold reduced the company’s revenues there by approximately USD40 million.
The operational trend in Macau is much brighter, suggested Michael Leven, LVS’s Chief Operating Officer. He said the Venetian Macao delivered a quarterly record USD150.4 million in adjusted property EBITDAR (earnings before interest, taxation, depreciation, amortisation and rent) for the third quarter. The company said the number of visitors to the property continued to lead the market, with more than 17.7 million in 2009, an increase of 4.5 percent over the first nine months of 2008.
EBITDAR margin at The Venetian Macao was 30.5 percent, compared to 26.0 percent in the prior year quarter. EBITDAR margin at Sands Macao was 27.5 percent, compared to 17.1 percent during the third quarter of last year, said the company.
LVS stated that slot handle at the Venetian Macao increased 10.9 percent compared to the equivalent quarter one year ago. Mass table volumes at The Venetian Macao continued to lead the market, said the operator, at nearly USD835 million during the quarter. VIP rolling volume in table games was USD9.06 billion, with the portion of that volume representing direct play increasing to a record 19.3 percent in the third quarter of 2009, compared to 14.9 percent in the third quarter of 2008.
“The increase in direct play is an important development for this business segment, given its meaningfully higher margin structure in comparison to rolling volume play that involves the services of a gaming promoter,” said Mr Leven.
He added LVS was 90 percent of the way toward its target of USD300 million in annual cost savings in Macau. Most of those savings were achieved in the first half of the year, with USD45 million-worth recorded in Q3 2009, and a further USD15 million expected in the fourth quarter.
“We have now implemented cost savings of approximately USD270 million on an annualized basis across our Macau operations, or approximately 90 percent of our USD300 million target. We realized approximately USD45 million in cost savings across our Macau operations in the quarter, while approximately USD60 million of these savings will be realized in the year ended December 31, 2010.”
