GGRAsia – Melco Resorts 2Q revenue grows, posts US$21mln profit

Melco Resorts 2Q revenue grows, posts US$21mln profit

Aug 13, 2024 Newsdesk Latest News, Macau, Philippines, Top of the deck

Casino group Melco Resorts & Entertainment Ltd reported total operating revenues of just under US$1.16 billion for the three months to June 30, up 22.3 percent from a year earlier. Judged in quarter-on-quarter terms, the figure rose 4.5 percent, according to a Tuesday press release.

The company posted a second-quarter net profit attributable to shareholders of US$21.4 million, compared to a net loss of US$23.4 million in the prior-year period. Such profit was up 40.8 percent sequentially, from US$15.2 million in the opening quarter of 2024.

Total operating costs for the April to June period rose by 17.2 percent year-on-year, to US$1.04 billion. Such spending was up 5.0 percent from the preceding quarter.

Second-quarter operating income stood at US$123.7 million, up 92.5 percent from a year ago, but down 1.3 percent sequentially.

Melco Resorts said in Tuesday’s announcement that the increase in total operating revenues in the reporting period “was primarily attributable to the improved performance in the mass-market segment and non-gaming operations, led by the continued recovery in inbound tourism to Macau during the second quarter of 2024”.

Second-quarter adjusted property earnings before interest, taxation, depreciation, and amortisation (EBITDA) were US$302.8 million, up 13.3 percent year-on-year, and 1.3-percent higher sequentially.

Melco Resorts runs casinos in Macau, a property in the Philippine capital Manila, and gaming venues on the Mediterranean island of Cyprus.

Lawrence Ho Yau Lung, Melco Resorts’ chairman and chief executive, said in prepared remarks: “Our strategic initiatives to expand revenue and profitability, and drive growth continued to evolve in the second quarter of 2024.”

The CEO said the company was “investing in people and incorporating enhancements” to the group’s properties “to provide the best premium experience available in Macau to our patrons”.

He added: “We’ve seen growth in GGR [gross gaming revenue] quarter-to-quarter and year-over-year, and our teams are focused on driving continued expansion of our market position.”

John DeCree and Max Marsh, analysts at CBRE Capital Advisors Inc, said in a Tuesday note: “We estimate Melco’s second-quarter 2024 GGR share increased 60 basis points sequentially to 14.8 percent.

“The initial improvement is encouraging considering management only began making investments to counter market share losses in the second quarter, including key new hires.”

Melco Resorts had previously flagged some operational changes at its Macau properties, following the introduction of a new property level management earlier this year. They included building business in the group’s premium mass gambling segment.

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In July, JP Morgan Securities LLC lowered its estimate for second-quarter property-level EBITDA for Melco Resorts, citing “higher premium mass promotional/reinvestment activity resulting in lower net revenue conversion and weaker EBITDA”.

At the group’s Macau flagship property, City of Dreams, total operating revenue in the second quarter of 2024 was US$576.4 million, up from US$506.2 million a year earlier. It compared with US$550.9 million in the first quarter this year.

The property’s adjusted EBITDA rose 2.4 percent year-on-year, to US$165.1 million. The figure increased by 7.5 percent sequentially.

The group’s majority-owned Cotai resort Studio City (pictured) saw second-quarter operating revenues of US$352.3 million, compared with US$236.0 million in the prior-year period, and US$331.4 million in the preceding quarter.

The complex generated second-quarter adjusted EBITDA of US$79.2 million, up 92.7 percent year-on-year, but down 9.9 percent sequentially.

At City of Dreams Manila, second-quarter operating revenues fell by 6.4 percent year-on-year, to US$109.0 million, and were down 1.5 percent from the preceding quarter.

The property generated adjusted EBITDA of US$40.5 million for the three months to June 30, down from US$47.0 million a year ago, but up from US$37.8 million in the first quarter this year.

Melco Resorts operates three satellite casinos in Cyprus in conjunction with the City of Dreams Mediterranean.

Total operating revenues in the Cyprus operation were US$58.7 million for the quarter ended June 30, compared with US$30.9 million a year earlier, and US$52.4 million in the opening quarter of 2024.

Melco Resorts’ total debt stood at US$7.22 billion at the end of June, a reduction of about US$100 million from March 31, 2024, following a refinancing exercise in late April.

The company said its capital expenditure for the second quarter was US$47.6 million, “which included costs related to the enhancement projects at City of Dreams in Macau and Studio City”.

(Updated 9.20am Aug 14)