Macau casino operator Galaxy Entertainment Group Ltd on Wednesday said profit for the first half of 2015 decreased by 66 percent in year-on-year terms to HKD2.0 billion (US$258 million). The results included HKD1.0 billion of non-recurring charges and were also impacted negatively by win rates, the firm said.
Galaxy Entertainment declared a special dividend of HKD0.14 per share to be paid on October 30.
Half-year revenue was HKD25.4 billion, down 34 percent compared to the prior-year period, Galaxy Entertainment said in a press release.
The company’s total gaming revenue in the first half of 2015 declined 36 percent year-on-year to HKD24.5 billion.
In the second quarter alone, the group’s total gaming revenue decreased 38 percent year-on-year to HKD11.2 billion. Total mass table revenue for the period between April and June contracted 19 percent year-on-year to HKD3.9 billion, while total VIP revenue fell by 47 percent to HKD6.9 billion.
The company reported adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of HKD4.2 billion for the six months to June 30, down 43 percent year-on-year. Second quarter adjusted EBITDA stood at HKD1.9 billion, a decrease of 46 percent.
“Market conditions within Macau remain challenging,” Galaxy Entertainment’s chairman Lui Che Woo said in a statement included in the firm’s press release.
He added: “Customers’ spending behaviour across the market remains cautious, resulting in lower year-on-year revenues for the group. As a result, earnings at Galaxy Entertainment in the second quarter were partially impacted by lower revenues and the opening preparation costs of Galaxy Macau Phase 2 and Broadway Macau, including the additional staff costs in the lead up to the grand opening.”
Mr Lui said the group’s management would continue to focus on driving efficiencies and exercising “rigorous cost controls”. The firm has already implemented a “salary freeze for all senior executives”.
Galaxy Entertainment’s first half results included 35 days of operations of the second phase of casino resort Galaxy Macau and sister property Broadway at Galaxy Macau, both opened on May 27.
“We continue to execute operationally and ramp up the property with a focus on the mass market,” Mr Lui stated, referring to the latest additions to Galaxy Entertainment’s property portfolio. “A majority if not all of the remaining gaming, retail and food and beverage outlets are expected to be opened by year end,” he added.
In its press release, Galaxy Entertainment also said it was “pleased that the Macau government has indicated some flexibility and are open-minded to consider the retention of smoking lounges” inside casinos.
The firm added: “Allowing smoking lounges would be viewed as a positive for the market. The gaming concessionaires continue to work together for a pragmatic solution.”
The Macau government might reconsider its position regarding a tabled ban on casino smoking lounges, depending on the results of an ongoing public consultation, Macau’s Secretary for Social Affairs and Culture, Alexis Tam Chon Weng, said earlier this month.
The territory’s Legislative Assembly is conducting a public consultation process on a planned revision of the tobacco control law until September 30.
On July 10, legislators approved the first reading of the government bill, which proposes the abolition of casino smoking lounges and a full smoking ban in VIP areas. The bill is now at committee stage in the Legislative Assembly, but it is likely to be next year before the revised rules become law.
Galaxy Entertainment additionally said on Wednesday that it planned to start site investigation works for phases three and four of its Cotai landbank between late 2015 and early 2016. The next stage of development should require an investment of at least HKD55 billion, according to previous announcements by the company.
The firm also confirmed it was “continuing with concept plans” for its 2.7 square kilometre (270 hectares) land parcel in Hengqin Island. The firm had previously announced it plans to build a RMB10 billion (US$1.6 billion) non-gaming, low-density resort in Hengqin, to complement its offering in neighbouring Macau.
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”According to Macau law, the security personnel of casinos and the management staff do not have the law enforcement power that the police have”
Wong Sio Chak
Macau’s Secretary for Security