GGRAsia – Melco Resorts loss down to US$81mln in 1Q as revenue soars

Melco Resorts loss down to US$81mln in 1Q as revenue soars

May 11, 2023 Newsdesk Latest News, Macau, Top of the deck

Casino operator Melco Resorts & Entertainment Ltd saw its net loss reduced to US$81.3 million in the first quarter, compared with a net loss of US$183.3 million a year earlier. The net loss was down 67.7 percent sequentially, according to the firm’s first quarter results filed in the United States on Wednesday.

Total operating revenues for the first quarter this year were US$716.5 million, a jump of 50.9 percent from the prior-year period, and an improvement of 112.5 percent quarter-on-quarter.

The year-on-year increase was mainly due to the “improved performance in all gaming segments primarily due to the relaxation of Covid-19 related restrictions in Macau during the quarter,” said the company.

Melco Resorts generated adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$190.8 million in the three months to March 31, compared with US$56.0 million in the first quarter of 2022.

The company had reported negative adjusted property EBITDA of US$6.8 million for the final quarter of last year.

“We have seen a very encouraging start to the recovery in Macau during the first quarter of 2023, following the relaxation of border restrictions in early January,” said Lawrence Ho Yau Lung, the group’s chairman and chief executive, in prepared remarks accompanying the results.

“We continued to see improving momentum into April and Golden Week in May, with mass-market table games drop and mass gross gaming revenue during the Golden Week period exceeding the same period in 2019,” stated Mr Ho.

The May Golden Week was a reference to a five-day break on the Chinese mainland that began on April 29 and encompassed Labour Day on May 1.

Melco Resorts opened in April the second phase of its majority-owned Studio City casino resort, in Macau’s Cotai district. It included the launch of an additional hotel tower and an indoor water park.

Joseph Greff and Ryan Lambert, analysts at JP Morgan Securities LLC, said in a Wednesday note that the gaming operator’s first quarter results had been “negatively impacted by low hold across both VIP and mass segments in Macau.” Adjusting for these impacts, Melco Resorts’ Macau property level EBITDA “was in line with our above-consensus estimate”, stated the two analysts.

Strong operational performance

At the group’s Macau flagship property, City of Dreams (pictured), on Cotai, total operating revenues in the first quarter this year were US$358.3 million, versus US$256.7 million a year earlier, and US$139.2 million for the quarter ended December 31, 2022.

The property generated adjusted EBITDA of US$94.9 million, compared with adjusted EBITDA of US$44.4 million in the first quarter of 2022, and negative adjusted EBITDA of US$7.8 million in the fourth quarter last year.

VIP rolling chip volume at the property was US$4.04 billion for the three months ended March 31, up 64.9 percent in year-on-year terms. Rolling chip volume was US$850.4 million for the fourth quarter of 2022.

Mass-market table games drop at City of Dreams increased by 84.6 percent year-on-year to US$1.02 billion in the first quarter of 2023. It was up by 249.1 percent sequentially.

Total non-gaming revenue at City of Dreams in the first quarter of 2023 was US$58.3 million, up 54.2 percent from the prior-year period. It compared to total non-gaming revenue of US$30.5 million for the fourth quarter of last year.

At City of Dreams Manila, a casino resort in the Philippine capital, total operating revenues were US$133.3 million, an increase of 53.4 percent in year-on-year terms.

The complex generated adjusted EBITDA of US$60.9 million in the three months ended March 31, compared with adjusted EBITDA of US$33.0 million in the comparable period of 2022.

VIP rolling chip volume at that property was US$655.8 million in the first quarter of 2023 versus US$647.9 million a year earlier. Mass-market table games drop increased to US$177.1 million, compared with US$127.3 million in the first quarter of 2022.

Mr Ho said adjusted property EBITDA at City of Dreams Manila for the first quarter of 2023 had surpassed that of the first quarter of 2019, the last trading year before the onset of the Covid-19 pandemic in early 2020.

In Cyprus, the City of Dreams Mediterranean casino resort was expected to open in “in mid-June,” he added.