GGRAsia – Universal Ent back to profit after Wynn Resorts settlement

Universal Ent back to profit after Wynn Resorts settlement

Feb 15, 2019 Newsdesk Latest News, Philippines, Top of the deck

Japanese gaming company Universal Entertainment Corp returned a net profit of about JPY161.17 billion (US$1.46 billion) last year, having made a net loss of nearly JPY13.43 billion the year before. Universal Entertainment told the Tokyo Stock Exchange on Thursday that its net sales had risen to almost JPY93.27 billion last year from almost JPY68.55 billion the year before.

A major contribution to the improved profitability of the gaming and entertainment company was a compensation settlement worth JPY158.88 billion paid by casino group Wynn Resorts Ltd to settle a stock redemption dispute. Contributing to the net loss in 2017 was the litigation that pitted the company against the United States’ casino operator.

Universal Entertainment’s return to profit included both revenue from manufacture and sales of pachinko machines and its casino resort operations at the Okada Manila (pictured), in the Philippines.

The casino-resort business made an operating loss of nearly JPY6.21 billion last year on net sales of almost JPY48.94 billion. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in the casino resort business were nearly JPY4.09 billion yen, and quarterly adjusted segment EBITDA kept rising throughout the year.

Universal Entertainment has previously said the casino resort in the Philippines was not reaching its targets. Although, in December, the company said the business had steadily increased revenue and profit.

In Thursday’s announcement, Universal Entertainment said the resort increased net sales by adding hotel rooms and restaurants, by opening VIP gaming casino areas and catering to gamblers on junkets, and by making efforts to market its mass-market casino.

“[The] Philippine gaming market in 2018 continued to grow at an annual rate in excess of 13 percent, and [the] Okada Manila’s share in the market increased due to the opening of integrated resort components and differentiations in terms of the scale of facilities and the quality of services,” the company’s announcement said.

The Okada Manila had gross gaming revenue of almost PHP27.22 billion (US$519.01 million) last year, PHP12.65 billion of it from VIP table games, more than PHP6.84 billion of it from 235 mass-market table games and almost PHP7.73 billion of it from gaming machines.

The VIP rolling chip win rate for last year stood at 3.06 percent, the mass table games win rate was 41.5 percent and the win rate from 2,725 mass-market gaming machines was 6.4 percent.

The data showed the casino resort was creating a significant proportion of Universal Entertainment’s income.

The company is currently engaged in a multifaceted dispute with its founder and former boss, Japanese gaming magnate Kazuo Okada, who is attempting to regain control of the group.

Universal Entertainment is endeavouring to list equity in the Okada Manila at the Philippine Stock Exchange. Universal Entertainment is preparing to take public Tiger Resort, Leisure and Entertainment Inc, the core company in casino resort business, this year to accelerate growth. As at February 4, Universal said it had completed the purchase of 66.6 percent of Asiabest Group International Inc, which is listed on the Philippine Stock Exchange, to facilitate the listing of shares.

The company plans to release additional hotel rooms in Tower B of the casino resort. The results announcement said the additional capacity will support continued growth in the casino business as well as better position the resort to host large group events and foreign tour groups.

“VIP casino revenues are expected to continue growing driven by the addition of new junkets, and more demand from existing junkets,” the announcement said.

The company said it would attempt to ramp up the offering at Okada Manila by ramping up hotel, food and beverage, retail outlets and entertainment businesses there. A drive to attract business meetings and other business events will also commence.

Among these other significant moves, the name of the resort itself is also up for change, according to a press release issued last week.