Company Profits Still Struggling

There seems to be no end in sight for companies that have struggled to gain a foothold in their earnings since the economic downturn really took hold late last year. Every quarter since, in most cases, has brought even more dire news as profits have continued to slide southward.

Viad, the parent company of GES Exposition Services, had a particularly challenging quarter, with third-quarter revenue down to $181.1 million from $302.3 million in the same period last year, a 40.1-percent decrease.

GES' third-quarter earnings fared even worse, with revenues dropping to $106.6 million from $203.3 million in the same period last year, a 46.7-percent decline.

According to CEO John Jastrem, GES lost $58 million in revenue because of negative show rotation, including the Intl. Manufacturing Technology Show and MinExpo Intl. shows, which occurred in the third quarter of last year, but not during the same period this year.

Paul B. Dykstra, Viad's chairman, also pointed to declines in exhibitor spending, adding, “GES' same-show revenues were down 25 percent, as compared to 27 percent during the second quarter (this year).”

To stem the losses, Jastrem said some cost-cutting has taken place, including scaling back on staff and closing some facilities. “We've dramatically reduced the real estate we have,” he added. “(Also), as we become more efficient, we may need less people or people with different skill sets.”

Next year also looks challenging, Jastrem said. Even so, he added, “It's a great time to reinvent business when things are slower. I think it's important that people look and see there are real opportunities at this time. Unfortunately, some of our competition probably doesn't have the same kind of balance sheet to do the same kind of changes we are doing right now.”

Jastrem said, “The stronger players are definitely taking that approach.”

In Las Vegas, some of the big casino companies, Boyd Gaming and Harrah's Entertainment, to name a few, also continued to experience steep dips in their earnings.

Boyd Gaming's overall third-quarter net revenue fell to $398.2 million from $426.5 million in the same period last year, an 8-percent dip. Third-quarter net profits also fell to $6.3 million from $8.7 million in the same period last year, a 27-percent decrease.

During the company's third-quarter earnings call, Keith Smith, Boyd's president and CEO, also said the company's stalled Echelon project “will resume construction in three to five years.”

He added, “We continue to believe in the long-term viability of the Las Vegas market. But given the ongoing weak economic conditions, the significant new supply coming online and difficult market environment for projects of this nature, resuming construction in the near term is not an option.”

Harrah's Entertainment, which owns 50 casino properties worldwide, took a big hit in the third quarter, with company-wide net revenues dropping to $2.3 billion from $2.6 billion in the same period last year, a 13.7-percent decrease. The loss from operations was $1.05 billion, compared with income from operations of $349.6 million in the same period last year, a decrease of more than $1.3 billion.

“During the third quarter, we continued our focus on aligning expenses with revenues and addressing our capital structure to cope with the protracted economic slump,” said Gary Loveman, Harrah's chairman, president and CEO.

One bright spot on the Strip in the third quarter was Las Vegas Sands, which saw its overall revenue rise to $1.14 billion from $1.11 billion in the same period last year, a 3-percent increase.

Part of the increase came from healthy gaming profits in Macau, including the Sands Macao and Four Seasons Macao, both of which saw double-digit boosts in the third quarter.

Sheldon Adelson, the company's chairman and CEO, said the Marina Bay Sands in Singapore also is on track to open in the first quarter next year.