Paradise Co’s first quarter net profit plummets
South Korean casino operator Paradise Co Ltd on Thursday reported net income of approximately KRW3.10 billion (US$2.88 million) for the three months ended March 31, down 61.6 percent from the prior-year period.
The company reported an operating profit of approximately KRW4.81 billion for the first three months of 2018, compared to an operating loss of KRW7.70 billion in the first quarter of 2017, according to a filing to the Korea Exchange.
No commentary on the reasons for the year-on-year net income decline was given in the company’s filing.
The profit decrease was despite a jump in revenue during the reporting period. Paradise Co said total revenue rose by 26 percent year-on-year in the first quarter to about KRW179.51 billion, from approximately KRW142.44 billion in the prior-year quarter.
The first-quarter revenue included casino sales of KRW149.37 billion for the three months to March 31, up 19.9 percent from a year earlier.
Paradise Co’s casino figures are based on the results of four venues it operates in its casino business division. They are: Walkerhill in Seoul; Jeju Grand on Jeju Island; Busan Casino in the southern port city of Busan; and Paradise City (pictured), in Incheon, near the main international airport serving the country’s capital Seoul.
On Thursday, the casino firm also released a business performance forecast for full-year 2018. Paradise Co said it expected sales to reach KRW860 billion this year, and earnings before interest, taxation, depreciation and amortisation (EBITDA) of KRW95 billion.
Brokerage JP Morgan Securities (Asia Pacific) Ltd said in a Friday note that Paradise Co’s 2018 guidance “came as a big surprise”.
“Its [Paradise Co’s] full-year EBITDA/Operating Profit guidance suggests about 40 percent/75 percent downside to current consensus, as it turns out that Phase I-2 of Paradise City (opening in September) will be significantly loss-making (this is the first time that the company discusses its operational expenditure or profitability),” said analysts DS Kim and Sean Zhuang.
They added: “We knew Phase I-2 was going to be a ‘loss-leader’ that would attract traffic to the property, but we were too complacent in thinking the amount of loss would be reasonable.”
In a separate filing also on Thursday, Paradise Co announced that in April its casino sales fell by 0.7 percent year-on-year, to nearly KRW38.39 billion.
Table game sales accounted for nearly 92.9 percent of the group’s total casino sales in April, at approximately KRW35.67 billion, down 0.1 percent year-on-year. Gaming machine sales stood at nearly KRW2.72 billion, down 8 percent from the prior-year period.
Casino sales for the first four months of 2018 stood at KRW187.05 billion, an increase of 14.5 percent from a year earlier, said the company.
(Updated May 11, 8.26am)
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