South Korean casino operator Paradise Co Ltd on Tuesday reported a net loss of approximately KRW19.5 billion (US$17.3 million) for the three months ended June 30, compared to a net profit of KRW25.5 billion for the prior-year period.
The company had reported a net profit of nearly KRW8.1 billion for the first three months of 2017. For the six months to June 30, the firm had an accumulated loss of about KRW11.4 billion, it said in a filing to the Korea Exchange.
Paradise Co reported an operating loss of KRW27.3 billion for the second quarter of 2017, compared to operating income of approximately KRW32.8 billion a year earlier.
The casino operator said total revenue from sales fell by 26 percent year-on-year, to about KRW139.9 billion in the second quarter. Judged sequentially, sales were down 1.8 percent, the firm said.
The company reported casino sales of KRW114.9 billion for the three months to June 30, down 31.1 percent from a year earlier and 7.8 percent sequentially.
Paradise Co said casino sales were down due to weak VIP luck during the reporting period, as well as a decline in the number of Chinese VIP customers, as a result of a diplomatic row between South Korea and China. The diplomatic row was sparked by the siting on South Korean soil of a U.S.-supplied missile system – known as Terminal High Altitude Area Defense (THAAD) – designed to counter North Korea’s ballistic missile programme. The first parts of the system began being deployed in early March.
The number of Chinese visitors to South Korea – an important source of customers for foreigner-only South Korean casinos – fell 41 percent year-on-year in the first six months of 2017, according to data from the Korea Tourism Organization.
Paradise Co reported table drop of KRW1.12 trillion for the second quarter, compared to KRW1.20 trillion in the prior-year period. Chinese VIP patrons to the firm’s casinos accounted for 34.8 percent of the total table drop in the April to June period, according to Tuesday’s statement. In the second quarter of 2016, Chinese VIPs had accounted for 50.6 percent of the total table drop in that period.
Paradise Co’s latest casino figures are based on the results of four venues it operates, all foreigner-only casinos, namely: Walkerhill (pictured) in Seoul; Jeju Grand on Jeju Island; Busan Casino in the southern port city of Busan; and Paradise City (pictured), in Incheon, near the main international airport serving the country’s capital Seoul. The first phase of Paradise City – a venture between Paradise Co and Japanese pachinko operator Sega Sammy Holdings Inc – opened on April 20.
The firm said in its latest filing that the casino at Paradise City is “slowly ramping up due to [the] unfavourable political climate” affecting the business. The hotel, it added, “made successful debut among Korean citizens”.
In a separate filing also on Tuesday, Paradise Co announced that in July its casino sales grew by 1.6 percent year-on-year, to KRW49.9 billion.
Table game sales accounted for nearly 93.2 percent of the group’s total casino sales in July, at approximately KRW46.5 billion, up by 1.9 percent year-on-year. Gaming machine sales stood at nearly KRW3.4 billion, down 1.7 percent from the prior-year period.
"The positive underlying contribution from each of our operating segments provides a strong start to the year"
Chief executive of lottery and gaming supplier IGT