Casino operator Paradise Co Ltd saw its net profit shrink 20.5 percent in the first quarter of 2015 to KRW40.5 billion (US$37.1 million).
Revenue in the three months ended March 31 decreased by 11.2 percent year-on-year to KRW151.4 billion, Paradise said in a filing on Thursday. The decline was mostly caused by a fall in casino revenue, which contracted by 13.0 percent year-on-year to KRW131.2 billion.
Operating profit went down by 29.3 percent to KRW22.6 billion in the January to March period.
During the first quarter, Paradise recorded a one-off disposal gain of KRW19 billion due to the discontinuation of its casino business in Kenya.
Paradise currently runs five foreigners-only casinos in South Korea: one in the capital Seoul; one in Incheon near the capital’s international airport; one in the southern city of Busan and two on the island of Jeju.
“We expect the second quarter of 2015 to be a turning point for Paradise’s earnings,” Daiwa Securities Group Inc analyst Thomas Y. Kwon wrote in a note following the results announcement. He mentioned several factors, including the “casino-floor expansion (around 25 percent) at Walkerhill [Seoul] expected in June 2015” and “an increased casino floor (by around 30 percent) at its Incheon casino”.
Mr Kwon added: “We believe Paradise could regain its growth momentum in casino visitors and drops from the second half of 2015.”
He noted that a drop of 13 percent in VIP visitor traffic impacted the company’s first quarter results.
The number of Chinese VIP patrons to Paradise’s casinos (that accounted for 64 percent of the total table drop, defined by the company as “the amount of cash exchanged for chips by customers at the table”, and 51 percent of total VIP visitors) declined by 17 percent year-on-year. The number of high rollers from Japan fell by 16 percent year-on-year.
Paradise had a share of 46.9 percent of the South Korean market based on casino sales in the first quarter, according to data from the Korean Casino Association cited by the company. That is down from 51.1 percent a year earlier and from a 49.5-percent share in the previous quarter.
South Korean casinos currently only permit foreigners to gamble, except at Kangwon Land, a difficult-to-access location 150 kilometres (93 miles) southeast of Seoul in Kangwon province.
Paradise broke ground in November at the site of its planned US$1.7 billion Paradise City scheme at Incheon, to be developed in partnership with Japan’s Sega Sammy Holdings Inc. The scheme is scheduled to open in the first half of 2017.
