GGRAsia – Paradise Co 4Q op profit falls on Incheon resort costs

Paradise Co 4Q op profit falls on Incheon resort costs

Feb 09, 2017 Newsdesk Latest News, Rest of Asia, Top of the deck

Net profit attributable to shareholders of the parent company at South Korean casino operator Paradise Co Ltd rose 48.9 percent year-on-year in the fourth quarter of 2016, to KRW5.39 billion (US$4.7 million).

But net income at the firm during the three months to December 31 fell 31.2 percent, to KRW4.39 billion. The company didn’t give commentary on the reason for the disparity between the two profit figures.

It noted however that fourth-quarter operating profit was down 41.9 percent – to KRW6.40 billion – “due to extended loss from Paradise SegaSammy,” a reference to costs relating to the under-construction Paradise City scheme (pictured in a file photo) near Incheon International Airport. Such loss on operating profit amounted to KRW3.04 billion for the period.

Paradise City – a new casino resort being developed in collaboration with Japan’s Sega Sammy Holdings Inc – is due to have a first-phase launch in April according to previous statements by Paradise Co.

The casino group is likely to post a 35.3-percent increase in sales in full-year 2017, fuelled by Paradise City, said Seoul-based brokerage Shinhan Investment Corp in a January report.

In the fourth quarter 2016, “other expenses” for Paradise Co rose 99.5 percent, to KRW7.17 billion, from KRW3.59 billion in the prior-year period.

Paradise Co’s total sales for the three months to December 31 fell 2.6 percent year-on-year, to KRW173.64 billion. Casino sales for the fourth quarter were down 3.7 percent year-on-year, to KRW150.97 billion.

For the calendar year, net profit attributable to shareholders of the Paradise Co was down 15.5 percent, to KRW55.13 billion, from KRW65.24 billion in 2015.

The group’s casino sales for 2016 – contributing 86.8 percent of group sales – rose 14.2 percent year-on-year, to KRW603.42 billion. Sales of hotel services increased by 3.2 percent, to KRW76.08 billion.

Cost of sales – representing 80.1 percent of the value of all sales – rose 13 percent for the 12-month period, to KRW556.77 billion.

The company currently operates five foreigner-only casinos in South Korea. Paradise Walkerhill in Seoul made the largest contribution by venue to group casino sales during 2016. The venue accounted for KRW3.51-billion, or 55.9 percent, of the group’s KRW6.28-billion in casino sales.

Chinese VIPs made the largest contribution to casino drop for the group during 2016. They accounted for 52.1 percent, or KRW2.75-trillion, of the group’s KRW5.28-trillion casino drop. Japanese VIP players ranked second, with KRW1.23 trillion, or 23.3 percent, of total casino drop.

Paradise Co also reported its January results to the Korea Exchange on Thursday. They showed casino revenue down 22.2 percent year-on-year, at KRW43.88 billion.