Fitch Ratings Inc has revised the rating outlook for Japan-based Universal Entertainment Corp to ‘negative’ from ‘stable’. The firm affirmed its ‘B’ long-term issuer default rating (IDR) and the ‘B-’ rating on Universal Entertainment’s outstanding U.S. dollar-denominated senior secured notes.
The conglomerate is the parent of Tiger Resort, Leisure and Entertainment Inc, the promoter of the Okada Manila casino resort (pictured) in the Philippine capital, Manila.
Fitch’s step regarding the parent reflects “the absence of a clear near-term recovery path in its integrated resort (IR) segment”, as well as Universal Entertainment’s “unexpectedly weak financial results in 2024”.
The firm posted net sales of JPY126.33 billion (US$853.0 million) in full-year 2024, down 29.4 percent year-on-year. Universal Entertainment reported a net loss of JPY15.57 billion, compared to net income of JPY28.44 billion in full-year 2023.
Fitch said in its Monday memo that it had lowered its financial forecast for Okada Manila’s operations following a review of first-quarter results.
The Okada Manila business posted net sales of nearly JPY20.38 billion in the first quarter, equal to 59.2 percent of Universal Entertainment’s first-quarter consolidated net sales of nearly JPY34.43 billion.
For full-year 2024, gross gaming revenue (GGR) at Okada Manila stood at nearly PHP34.82 billion (US$609.2 million at current rates), down 21.8 percent from the previous year. Adjusted segmental earnings before interest, taxation, depreciation and amortisation (EBITDA) for full-year 2024 reached nearly PHP7.64 billion, down 37.8 percent from 2023.
For the first half of 2025, GGR at Okada Manila stood at PHP14.91 billion, down 15.4 percent from the previous year. Adjusted segmental EBITDA in the six months to June 30 stood at PHP2.93 billion, down 34.6 percent from the first half of 2024.
“Casino visitation remains subdued, and both VIP and mass-market segments’ performance has stagnated,” Fitch said in reference to operations at Okada Manila. “Intensifying local competition has created additional challenges, raising the risk of further setbacks in earnings growth.”
The rating agency added it saw “no clear trajectory for a near-term recovery in the IR segment”; that was a “key driver” of the ‘negative’ outlook for the parent. However, it noted that “the completion of major construction at the Okada Manila has reduced capital expenditure requirements”, supporting Fitch’s forecast of positive free cash flow, “albeit at lower levels than we previously anticipated.”
In June, S&P Global Ratings had already revised its outlook on the long-term issuer credit ratings of Universal Entertainment. The institution stated at the time, in reference to the company’s performance, that a “turnaround remains elusive”, as the performance of the group’s businesses – including the Okada Manila casino resort – remains subpar.
