Sands China Reports Lower Than Anticipated First Quarter Results
Sands China Ltd which is a subsidiary of the Las Vegas Sands Corp‘s has missed market analysts’ expectations for its first-quarter results as a result of the continued slump in visitor spending stemming from the slowdown in China.
Sands China reported $517.9 million as its adjusted property earnings before interest, taxes, depreciation and amortization for the quarter; down by 2.5 percent from the $531 million it brought in last year during the same period. The median estimate by analysts was $547 million.
The casino industry in Macau has been affected by the anti-corruption crackdown launched by Beijing which has reduced inflow of visitors especially VIP gamblers. This has resulted in plummeting casino revenues for the past 22 months and has significantly impacted all casino operators. Macau casino operators have been forced to revise their strategy and cater to mass market tourists.
Even though Sands China Ltd had a rough first quarter in 2016, Las Vegas Sands Chairman Sheldon Adleson continues to remain optimistic about Macau’s recovery.
In a statement Sheldon Adelson, who is also the chairman for Sands China said,
The mass market has increased. It’s performed better, and I think we can look forward to more of that and as far as the non-gaming is concerned, people have to eat, they have to sleep. They want to be entertained. There are non-gaming elements that I think will pick up again and do better in the future
Sands China shares dropped by 4.9 percent to HK$29.05 even though the Hang Seng Index rose by 0.7 percent. The share price for the company has declined by almost 48 percent since June 2014, which was when Macau first reported a decline in gross gaming revenue as a result of China’s anti-corruption crackdown.
Analysts from Sanford C Bernstein & Co LLC stated that Sands China’s first quarter results were weaker than anticipated because of rise in bad debt expenses and poor revenue from the non-gaming business sector. The company’s profit margin has dropped as a result of lower rental income from retail shops and reduced hotel occupancy rates.
According to Adelson retail sales have fallen in Macau due to the Chinese market slowdown which has impacted the amount spent by tourists. Sands China intends to open its new $2.7 billion Parisian Macao integrated casino resort before the end of this year and will make provision for the new casino to feature a number of non-gaming facilities for retail stores and meeting space in an attempt to attract more mass market gamblers.
Adleson believes that with the opening of the Parisian Macau, Sands China revenues will improve by the end of this year.
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