Las Vegas Sands Confident in 2023 Financial Performance
Author:
Scott Lawson
The prospects for one of the world’s wealthiest and most notorious casino empires are bright, following a tough 2022 – Las Vegas Sands anticipates a strong return this year. There are a number of things to be optimistic about, not least the easing of Covid restrictions in China, the extension of operating licenses in the city of Macau, and the new freedom of travel which so many wealthy international gamblers will enjoy now that the pandemic is behind us. The optimism is coming at a crucial time, as the company went through widening losses in the year closing in 2022.
The prime casino location in the LVS group is Marina Bay Sands. Demonstrating exceptional growth and financial performance, the firm are pinning their hopes and resources on this trend continuing. ?cegoh/Pixabay
The broadening of customer base that will now be possible in the revamped travel guidance is good news for everyone in the iGaming industry, not just Las Vegas Sands. As Robert Goldstein, the CEO of Sands group stated, there is a tremendous amount of interest coming back into gambling in the Singaporean market, and the rest of China and the wider region are expected to be in lockstep with that trend.
The increased airlift capacity and presence of customers back again on the floors of the world’s most lavish casinos will kickstart a new range of product innovation, predicts some industry analysts. The casinos in Macau, including Sands, will have to fulfill their pledges in the coming year, and begin setting in motion the proposals that convinced the local authorities to re-issue operating licenses to these organizations. This will concern the investment and commitment to build better leisure and business infrastructure for the city – in a bid to diversify away from purely gambling related revenues.
Macau’s perception as a great place for capital investment has been in a state of flux throughout recent years – wrapped in uncertainty and caught in a geopolitical battle, many Western investment groups were hesitant to commit to long-term projects in the region. But given the growth of this region and the compelling future that awaits Macau if it can maintain its pseudo-independence politically, there will be no region with stronger growth opportunities for investors.
Financial Performance of Las Vegas Sands in 2022
Unlike how their brand name suggest, Las Vegas Sands no longer owns or operates a casino in Las Vegas, United State. The Asia-based firm sold off its US operation for a total of $6.25 billion dollars at the beginning of 2022. The shift away from western markets and a re-focus on Asia has been a difficult transition for the group, and the effects of poor market demand coupled with travel restrictions into Macau have exacerbated the shortfall in earnings for the final quarter of 2022.
Whilst Macau gross gaming revenues continue to show the long-tail effect of suppressed demands, other regions within Asia like Singapore and the Philippines are posting record financial performances, demonstrating that growth is possible in these difficult times. These early indications of a rebound are music to the ears of Las Vegas Sands shareholders and give tremendous confidence to operational planners across the industry that the customers are going to return to the casinos in 2023.
Marina Bay Sands is the gem in the portfolio of the LVS group – and will be the central focus of investment and allocation of capital. Proving itself an efficient revenue generating machine was the first confirmation hypothesis, revenue was up by 85% YoY, to a total of $682 million – with adjusted EBITDA increasing by 54% to $273 million. The challenge now for Marina Bay Sands will be to curtail the increase of cost of capital, operating expenses for the business grew 18% for the year to $908 million. As a result, net losses were recorded of $269 million, a better performance YoY which recorded a $315 million. Keeping cost efficiency as a core business principle for the next 12 months will be key.
Looking ahead, LVS is sure to be focusing on new capital expenditure programs that will drive its growth ambitions in Macau and Singapore. These include things like integrated resort development; delivering on their pledges to establish better surrounding infrastructure at their locations that provide services and leisure venues outside the sphere of gambling. As for its now sold-off Las Vegas properties, these have been acquired by VICI Properties and Apollo Global Management.
