GGRAsia – Okada Manila 1Q net sales down 6pct amid pandemic

Okada Manila 1Q net sales down 6pct amid pandemic

May 29, 2020 Newsdesk Latest News, Philippines, Singapore, Top of the deck

Japanese gaming conglomerate Universal Entertainment Corp says its group net sales in the first three months of 2020 actually rose, by 80.1 percent, to JPY40.77 billion (US$380 million), from nearly JPY22.64 billion in the prior-year period.

Such growth was helped by a 358.5 percent year-on-year rise in net sales for the amusements equipment business, to JPY24.73 billion. Universal Entertainment makes pachinko and pachislot games for the Japanese domestic market, and more recently has branched into being a casino resort operator via the Okada Manila scheme (pictured) in the Philippine capital.

But the parent firm warned that pachinko business performance in the second quarter would be affected by the Covid-19 pandemic.

“Covid-19 has severely impacted the market for this business since Japan’s April 2020 declaration of a state of emergency because of the closing of pachinko halls nationwide and other effects of this crisis,” noted Universal Entertainment. The Japanese government lifted the last of the emergency declarations earlier this month.

Net sales at the Okada Manila casino resort – which felt the impact of Covid-19 earlier than the Japanese pachinko business – fell 6.3 percent year-on-year in the reporting period, to JPY15.71 billion, Universal Entertainment said in a Friday filing to the Tokyo Stock Exchange.

Universal Entertainment’s subsidiary Tiger Resort, Leisure and Entertainment Inc operates the Okada Manila casino resort.

The group’s casino resort business widened its first-quarter operating loss to JPY1.72 billion, versus JPY512 million in the same period of 2019.

Adjusted segmental earnings before interest, taxation, depreciation and amortisation (EBITDA) in the integrated resort business were nearly JPY2.17 billion, a decrease of 23.7 percent from first-quarter 2019. Group-wide adjusted EBITDA rose by 298.7 percent year-on-year, to nearly JPY12.13 billion.

The parent company said the group as a whole recorded an operating profit of nearly JPY5.88 billion in the first three months of 2020, compared to an operating loss of just over JPY3.15 billion a year earlier.

Universal Entertainment reported a group-wide net profit of just over JPY3.12 billion in the three months to March 31, compared to a net loss of about JPY4.09 billion a year earlier.

The company said that on a non-consolidated basis, the quarterly results from the Tiger Resort entity showed that Okada Manila’s first-quarter gross gaming revenue (GGR) fell by 9.3 percent year-on-year, to just under PHP8.64 billion (US$171.1 million), from nearly PHP9.52 billion in the prior-year period. Revenue from the VIP segment fell by 7.1 percent year-on-year in the first quarter, to nearly PHP4.58 billion, from PHP4.93 billion a year ago.

GGR from the mass-market table segment fell by 22.7 percent year-on-year, to just under PHP1.70 billion. Gaming machine GGR slipped 1.3 percent to PHP2.36 billion.

The parent firm noted that all operations at Okada Manila had been temporarily suspended from March 15, in response to an order from the Philippine Amusement and Gaming Corp (Pagcor) due to the global outbreak of Covid-19. The lockdown measures in Metro Manila have been extended in increments until at least May 31.

Universal Entertainment stated: “Prior to this suspension, gaming operations in the first quarter were performing well in both the VIP and mass-market machine categories mainly because of the patronage of guests who live in the Philippines.”

It added: “The hotel occupancy rate was very high in the first quarter until the suspension began.”

Universal Entertainment said it expected to record sales and earnings from several real estate transactions in 2020. “As was announced on February 14, 2020, a portion of land held by Eagle Landholdings Inc, an equity-method affiliate of Universal Entertainment, was sold,” said the parent, referring to a plot near to Okada Manila.

This week it emerged that Okada Manila was looking to cut more than 1,000 employees from its payroll due to “severe losses to the company” during the pandemic crisis.