* Q2 EPS 29 cents vs analysts' estimate 60 cents
* Macau, Singapore growth slowing as Chinese gamblers curb
* CEO Adelson says Q2 performance 'not a trend'
* Shares tumble in U.S., Hong Kong after results
By Sue Zeidler and Farah Master
LOS ANGELES/HONG KONG, July 26 Las Vegas Sands
Corp, owned by billionaire Sheldon Adelson, posted much
worse-than-expected quarterly earnings, hit by lower profits at
casinos in its key Asian markets that had previously helped
offset flagging U.S. revenue.
Adelson, the most active donor in U.S. Republican candidate
Mitt Romney's campaign, has benefited from the company's sizable
footprint in Asia compared with rivals such as Wynn Resorts
and MGM Resorts, but global economic malaise is
now taking a toll in Macau and Singapore.
The latest results from the company's Marina Bay Sands
property in Singapore were a "substantial miss," Wells Fargo
analysts said, noting a clear slowdown in growth. Initial
earnings from Sands' new Macau casino that opened in April, the
Sands Cotai Central, were also weaker than anticipated due to
subdued appetite from Chinese gamblers.
"Macau growth is slowing down a little bit and there is
increased competition," said Gregg Klein, an analyst with
Imperial Capital. "Sands Cotai has taken longer to ramp up than
anyone expected, including them."
Las Vegas Sands, best known for its Italian-themed Venetian
resort in Las Vegas and Macau, reported second-quarter net
income of $240.6 million, or 29 cents a share, down from $367.6
million or 45 cents a share a year earlier.
That was well below analysts' expectations of 60 cents a
share in a survey by Thomson Reuters I/B/E/S.
The news sent shares of the gambling company, the world's
biggest by market capitalisation, down 5.8 percent or $2.19 to
$35.32 in after-hours trade in the United States. Shares of
Sands China, Adelson's Macau unit, fell to a
seven-month low, down 6.5 percent at $20.80 by midday in Hong
The company said its "hold," or money won from gamblers,
fell at its casinos in Las Vegas, Macau and Singapore. Higher
provisions for money owed to the casino and legal fees also ate
into the company's profitability for the first half of the year.
Adelson acknowledged that the results did not meet his
expectations but said it was premature to label the quarter's
performance as a trend.
"One quarter does not a trend make. Anybody who thinks that
the cultural habits of the Asian people is changing because of
... one reduction in the hold, even though it amounted to over
$100 million at the top line, anybody who thinks that this is a
change of culture is just missing the boat," he said on a
Net income for Sands China, which operates four casinos in
Macau, the only place in China where casino-gambling is legal,
fell 40 percent to $160.5 million due to higher-than-expected
opening expenses at its Cotai Central and a $100.8 million
impairment charge on two land parcels.
Growth in Macau, which is highly reliant on wealthy Chinese
gamblers, has slowed significantly in the past three months due
to lower visitation and diminished spending
Earnings in Singapore, which typically attracts more
premium-end customers who spend more, were weighed down by
Sands' higher provisions for extended gambling credit to
In Singapore, most of the credit for Sands' VIP, or
high-roller business, comes directly from the company. By
contrast, junkets, or middle men, bear the credit risk in Macau.
"In Singapore the company has to face the VIP customers
directly and use their own reserves to deal with it. With direct
VIP customers, of course the risk is larger," said Victor Yip,
an analyst at UOB Kay Hian in Hong Kong.
NO SYSTEMIC PROBLEM
Las Vegas Sands executives said business at Singapore's
Marina Bay Sands remained in good shape and that receivables had
grown from a prudency standpoint. The company said it remains
very cash-rich, and expects to return more than $800 million in
cash to shareholders as dividends.
"Any slower collection issues we have encountered are really
specific to isolated cases as opposed to a systemic problem
across the portfolio of accounts," said Robert Goldstein,
executive vice president and president of Global Gaming
Operations, referring to Sands.
Fitch Ratings said it revised its 2012 Macau industry
r evenue growth forecast to 10-12 percent from 15 percent,
"reflecting our more cautious view with respect to the near-term
impact of the slowdown in China. This is our second downward
revision over the last couple of months."
Wynn Resorts reported weaker-than-expected second-quarter
earnings last week due to a poor performance at its Macau and
Vegas properties. MGM Resorts and local Macau players
such as Galaxy Entertainment will report in August.
Elevated legal expenses have also negatively impacted
earnings. Adelson has had to spend millions for lawyers working
on a range of cases that include defending allegations from a
former Macau casino executive that he personally approved
prostitution at his companies' properties in the Chinese