Moody’s Investors Service said in a Thursday note it was raising its 2016 EBITDA (earnings before interest, taxation, depreciation and amortisation) growth forecast for the U.S. gaming sector to a range of between 4 percent and 5 percent in year-on-year terms.
The previous estimate from the credit rating agency pointed to an EBITDA growth of between 3 percent and 4 percent in 2016.
“Industry-wide expense reductions that casino operators made in 2015 will continue to boost operating leverage over the next year and a half, benefiting operators’ credit profiles during a period of flat revenue growth,” Moody’s said.
It added: “Maintaining more efficient cost structures will be the primary driver of earnings growth for the U.S. gaming sector given Moody’s forecast for relatively flat gaming revenue over the next 12 to 18 months.”
Although Moody’s stated there is “little room for further cuts”, the rating agency expected U.S. casinos would “continue to reap the benefits of their lower cost structures”.
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Adjusted EBITDA reported by Asian casino operator Melco Resorts and Entertainment for the fourth quarter of 2020