Las Vegas Sands Q2 profit falls; Pinnacle Entertainment net income turnaround

TAGs: Caesars Entertainment, Las Vegas Sands, Macau, Marina Bay Sands, Pinnacle Entertainment

las-vegas-sands-pinnacle-entertainmentLas Vegas Sands’ second quarter revenue rose 10.1% to $2.58b, but profit came in at $240.6m, a 34% haircut from the $367.6m recorded in 2011. In Macau, revenue was up 22.3% to $1.48b, but net income was off 40% to $160.5m, the victim of a lower hold percentage at the VIP baccarat tables, expenses stemming from the April opening of the first phase of Cotai Central casino and a $100.8m noncash impairment on two other pieces of Cotai real estate (Parcels 7 and 8). On a conference call with analysts, LVS chairman and avowed non-fan of prostitution Sheldon Adelson said slots handle in Macau had risen 72.6% to a record $2.63b, with slots revenue rising 16.8%, bolstering reports that previously slots-avoiding Asian punters were warming to a new generation of slot machines. Combined with growth in rolling and non-rolling chip volumes, Adelson says it’s the first quarter Sands has exceeded Macau’s market growth in all three categories since 2008. Sands’ share of Macau’s overall gross gaming revenue also rose from 16% in Q2 2011 to 17.7% this year.

In Singapore, Marina Bay Sands revenue fell 5.8% to $694.8m on a 7.5% decrease in casino revenues (damn you, baccarat variance!). But here again, slots handle rose 15.1%. On the Las Vegas Strip, slots volume was up 8.2% and table games turnover rose 2.9%, but table game hold fell from 20% in Q2 2011 to 16.5% this quarter. Room occupancy was also off 2.6%, resulting in a 1.6% decline in overall revenue to $327.3m. In Pennsylvania, Sands Bethlehem posted operating income of $17.4m (+39.2%) on net revenue of $115.1m (+18.5%). Sands shares fell 2.6% on the day and a further 4.3% in after-hours trading.

Pinnacle Entertainment Inc., which operates six gaming joints in Louisiana, Missouri and Indiana plus a racetrack in Ohio, saw Q2 revenues rise 3.1% to $298.3m, beating analysts’ projections of $294.5m. Net income came in at $12m, a substantial improvement over the $29.1m loss in Q2 2011, which was laid low by a $10m charge stemming from the relaunch of a customer loyalty program. The company also announced it would open its new $368m L’Auberge Baton Rouge casino in Louisiana on Aug. 29 to take advantage of Labor Day traffic. The new joint will feature 1,500 slots and 50 table games. Pinnacle’s board also approved a share buy-back of up to $100m.

Caesars Entertainment isn’t expected to release its Q2 numbers until Aug. 6, but while we’re waiting to see how high their +$20b debt has risen, they say they’ve received Clark County’s approval to build the world’s tallest Ferris wheel. The Project LINQ ‘observation wheel’, first conceived back in 2010, will stand 550 feet, a whole 50 feet taller than the Skyvue wheel that’s already under construction down the strip across from the Mandalay Bay.


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