Melco sees increasing revenues, decreasing income in Q1 2019

Melco sees increasing revenues, decreasing income in Q1 2019

The first quarter of 2019 has been a bit of a mixed bag for Melco Resorts and Entertainment Ltd. In their earnings report, the operator indicated that revenues have improved year on year, but overall income has taken a hit.
It’s a pretty substantial hit too. Net income fell from $156.6 million to $117.4 million, representing a 25% decrease. This came despite an increase in operating revenue of 4%, going from $1.31 billion to $1.36 billion year on year. Adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) also improved from $401.8 million to $406.8 million.
They broke down this report based on their Studio City resort in Macau’s Cotai district, and the City of Dreams located in Manila’s Entertainment City. Those two spots had fairly different experiences in the first quarter.
There’s no denying that Macau has had a rough time of it so far in 2019. Studio City’s EBITDA declined by 12% year-on-year to $96.4 million. Lawrence Ho Yau Lung, the company’s CEO, noted that they’ve seen record mass table revenues at the resort, and increases in non-gaming assets.
Where it suffered was in VIP gaming, largely blamed on softer rolling chip data. VIP revenue reduced to $900,000 from $12.3 million in 2018. Overall, this hurt gross gaming revenue, which declined from $425.6 million to $348.9 million.
City of Dreams Manila had the opposite story, but also made up a smaller share of the pie. EBITDA increased from $58.8 million to $60.5 million. Ho commented, “In the Philippines, City of Dreams Manila delivered EBITDA growth of 3 percent year-over-year. With increased competition in and around Entertainment City, we are more cautious about 2019 and beyond.”
The focus going forward will be on growing the resort’s share of the Manila VIP Market. Senior Vice President Kevin Benning commented:
“We we’re opening up new casual junket space over the next month which will give us an additional 10 tables as well as renovating our overall VIP space … We are going to have some very nice high-end space for our top junkets.”
The overall goal of Melco is to secure a Japanese IR. Ho noted that this was the “simple-most important initiative” of the operator. He wouldn’t discuss specifics, but he did admit to discussing the company’s plans with several partners, making progress towards the goal. He concluded:
“Japan continues to be a core focus for us. We expect development of the next generation of integrated resorts to soon commence in this incredibly exciting, yet currently underpenetrated, tourism destination.”
The post Melco sees increasing revenues, decreasing income in Q1 2019 appeared first on CalvinAyre.com.
Source: Melco sees increasing revenues, decreasing income in Q1 2019

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