China’s high rollers are feeling the hit to their businesses from the trade war. That’s the feedback Las Vegas Sands Corp. (LVS) is getting from its wealthiest gamblers, according to company president Robert Goldstein.
“We hear from our people who work in the casino that customers are concerned about the trade war,” Goldstein said in a call with analysts to discuss second- quarter earnings. “It is impacting some of their business.”
Bloomberg Intelligence analysts Brian Egger and Caitlin Noselli said U.S.-China trade tensions may have exacerbated declines in wagers by VIP clients in Macau during the second quarter, contributing to weaker-than- expected results in the world’s biggest gambling hub.
Goldstein said the worries are coming from high-end entrepreneurs or those who work for companies impacted by the tensions between the U.S. and China. He cited a Chinese customer in Las Vegas who said the trade war is “really impactful.”
He said the sentiments are only anecdotal, and stressed that “Macau looks like it’s doing just fine.”
For example, Goldstein said, the Macau-based arm of the global gaming corporation recorded profit of $511 million (4.11 billion patacas) for the second quarter of 2019, a 19.7% increase over the equivalent period last year. During the same period, net revenue edged up 1.4% to $2.15 billion (MOP17.3 billion).
The growth was driven by the mass segment, including tables and slot, which increased about 11% year-on-year in the second quarter. Meanwhile, the premium mass segment slipped 4.2% in the same comparison period.
The two mass segments account for 85% of the operator’s gaming-related profit in Macau. The contribution of the mass-
market segment to the company’s total profits (including hotel and other entertainment activity) increased 3 percentage points in the second quarter to 56%, while the contribution of VIP play declined 2 percentage points to 7%, possibly impacted by U.S.-China trade tensions.
Parent company Las Vegas Sands saw its net profit soar 71.6% in the second quarter year- on-year, in part due to the completion of its $1.3 billion sale of its Bethlehem casino to an affiliate of Alabama’s Poarch Band of Creek Indians.
Las Vegas Sands remains staunch in its strategy to expand in Asia, said Goldstein.
“We remain enthusiastic about our future growth opportunities in Asia, which will be enhanced through the introduction of our Four Seasons Tower Suites Macao later this year, the Londoner Macao throughout 2020 and 2021 and the expansion of Marina Bay Sands in Singapore thereafter,” added Las Vegas Sands chairman and chief executive Sheldon Adelson, according to prepared comments, as cited by GGRAsia.
The firm says it expects a new tower for its Marina Bay Sands casino resort in Singapore, which will be operational by the start of 2024.
“We are also aggressively pursuing additional development opportunities in new markets, including in Osaka, Japan,” said Goldstein.
The company president also hinted that Sheldon Adelson, Sands China’s chairman, who was recently treated for cancer, was seeing his health improve and might return for the next earnings call in the third quarter. DB/Agencies
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