Sands’ second-quarter profit dips

By Liz Benston

Wednesday, Aug. 3, 2005 | 10:58 a.m.

The owner of the Venetian resort in Las Vegas said profit fell in the second quarter compared with a year ago, when earnings were boosted by the sale of the Grand Canal Shops mall.

Las Vegas Sands Corp. reported earnings of $86.4 million compared with $299.6 million a year ago. Excluding one-time events unrelated to management performance, the company said profit rose 142 percent.

Profit excluding those events was $95.5 million or 27 cents per share -- one cent above analysts' estimates -- compared with $39.5 million or 12 cents in the year-ago quarter.

Las Vegas Sands executives echoed MGM Mirage officials in saying that the opening of the Wynn Las Vegas resort in April helped rather than hurt business on the Strip.

The resort drew "a higher quality tourist" to Las Vegas and enabled the property to raise room rates, President and Chief Operating Officer Bill Weidner said.

Occupancy at the Venetian was even with last year at 99 percent and the average daily room rate was $231, a 5 percent increase from a year ago.

That rate was still 19 percent lower than Wynn Las Vegas' average rate of $284 in the second quarter -- the highest ever reported in Las Vegas.

Slot machine play by middle-market gamblers grew 7 percent in the second quarter, the company said. Table game volume also was up more than 10 percent.

High-end slot play at the Venetian was lower than the 2004 quarter, when one gambler put $33 million into a $500 slot machine.

The addition of high-roller suites and an improved baccarat pit at the Venetian has boosted the property's reputation among Asian gamblers and will help the property's cross-marketing efforts in the Chinese enclave of Macau, Weidner said.

One-time costs affecting profit included a pre-tax gain of $418.1 million on the sale of the mall and $8.5 million in expenses incurred prior to the May 2004 opening of the Sands Macau casino. In the recent quarter, earnings were affected by $4.7 million in development expenses and a $4.2 million loss on the early retirement of debt.

Revenue at the Venetian fell 2 percent to $180.4 million. At the Sands Macau casino, revenue more than tripled to $205.1 million.

Overall the company's revenue rose 50 percent to $398.8 million, including promotional costs.

During a conference call with investors, Las Vegas Sands officials said the company is moving forward with the development of the Cotai Strip -- which will include a series of hotels as well as a replica of its Venetian resort in Macau.

The company's Sands Macau casino, which will be expanded next year, has begun several promotions to draw mass-market gamblers from China including sweepstakes and bus trips. The company also has hired sales reps to draw more high-end business.

Las Vegas Sands also is accelerating the development of its Venetian Macau resort, which will now contain 3,000 rooms in its first phase instead of only half that number. The $1.8 billion resort is on track to open in mid-2007 along with a nearby Four Seasons hotel developed by Las Vegas Sands. The company also expects to develop and open two other hotels across the street by the end of 2007 as part of the Cotai Strip project.