MBS' results hit by poor luck and strong greenback

MBS' results hit by poor luck and strong greenback

Poor luck and a strong United States dollar again dragged down Marina Bay Sands' (MBS) first-quarter revenues and net profit.

Revenues fell 23.1 per cent to US$603.7 million (S$813.2 million) from a year earlier, while net profit plunged 33.8 per cent to US$274.9 million.

Bad debt provisions at MBS were US$32 million for the first quarter, compared with Genting Singapore's estimated bad debt provisions of S$52 million, according to Morgan Stanley.

Mr Sheldon Adelson, chairman and chief executive of parent Las Vegas Sands (LVS), said: "While the impact of the stronger US dollar and low win percentage on rolling chip play negatively impacted the company's reported financial results for the quarter, both gaming volumes and our non-gaming segments remain resilient."

Casino revenues fell 28.3 per cent to US$453.1 million in the quarter due to the firmer greenback, and a drop in win percentage in the VIP segment. The win percentage, or hold rate - the portion the casino retains on a $1 bet - was "below the expected range" at 1.42 per cent for the quarter, compared with 3.41 per cent a year earlier. That means that for every $1 wagered by VIP gamblers, MBS made 1.42 cents.

"While we may see some slackening demand on the VIP front, we see little sign for concern as we have come to expect VIP volatility on a quarter-to-quarter base in the market. Further, we believe that mass market demand remains healthy," Union Gaming Research said.

Total mass win-per-day in the quarter was US$4.8 million - a quarterly record for MBS in local-currency terms, Mr Adelson said.

Meanwhile, hotel room revenue fell 0.8 per cent to US$88.9 million, while mall turnover dipped 2 per cent to US$39 million.

He said he is considering selling the resort's retail assets after a government-imposed moratorium expires next year. The firm has spoken to potential buyers, he said in a conference call.

Revenue per available room (RevPAR) and average daily rate (ADR) were undermined by the stronger dollar. ADR fell to US$394 from US$414 a year earlier, while hotel occupancy rose to 97.9 per cent from 94.8 per cent and RevPAR slid to US$386 from US$393 a year ago.

Convention, retail and other revenues fell 21.3 per cent to US$21 million, while food and beverage sales remained resilient, rising 1.8 per cent to US$46 million.

Mr Robert Goldstein, LVS president and chief operating officer, said: "The 34 per cent increase year-on-year in Chinese visitation to Singapore is very impressive. We're very happy with the quarter." He added that it was unfortunate that they suffered from the currency issue, but it is not something they can control.

"But if you take our numbers and really dissect what happened there, our retail business was strong."

This article was first published on April 22, 2016.
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