Expansion hits profits at Las Vegas Sands
6th February, 2008
Las Vegas Sands, the world's largest casino operator by market value, has revealed that its latest profits are significantly lower than originally predicted.
Fourth quarter profits for the firm plummeted 65 per cent from $113.6 million (£58 million) to $39.9 million (£20 million), largely due to spiralling costs associated with the expansion of its Macau and Las Vegas sites.
Interest expenses at the new flagship Venetian Macao were up 83 per cent and development costs for the 3,000-room casino gambling hotel doubled over the past 12 months.
However, the markets seemed largely unperturbed by the casino firm's disappointing figures, with share prices rises 1.7 per cent yesterday evening upon the release of the report. That followed a 7.3 per cent dip earlier in the trading day as fears of a US recession took a toll on all sectors.
"The bottom-line numbers looked disappointing … [but] the operating results were fairly solid," insisted Joel Simkins, an analyst with Macquarie Securities USA, in an interview with Bloomberg. "This is a five-to-ten-year growth story that Las Vegas Sands is executing on and in the interim there are going to be some soft quarters, just given the magnitude of the projects."
CNN reported that Morgan Stanley upgraded its valuation of Las Vegas Sands following the report, citing long-term growth potential in Macau.
