Melco Resorts Q3 revenue doubles, but Covid-19 impact continues to be felt
The company recorded revenue figures of $446.4m, representing a 109.7% increase when compared to the corresponding period in 2020 when novel coronavirus(Covid-19)-induced travel restrictions to Macau severely affected performance. This led to significant losses, of over $1bn, for 2020.
Casino revenue was up 118.4% to $373.1m. The City of Dreams casino was the best performer, generating $252.0m – a 175.7% improvement on 2020.
Studio City contributed $81.8m – up 165.6% – while the Manilla branch of City of Dreams reported revenue of $52.5m.
Room revenue rose 119.7% to $33.4m, food and drink generated $20.5m, while entertainment and retail revenue came to $19.3m.
Melco’s expenses also rose during the quarter, increasing 28.8% to $628.6m. Casino costs were $297.8m, up from $207.2m in 2020. Depreciation and amortisation amounted to $127.7m, with general and administrative costs adding $112.0m.
Development costs were $24.6m, food and drink expenses came to $21.0m, and room costs were $11.6m. Non-operating expenses totaled $87.1m.
This resulted in pre-tax losses of $269.3m, down from $385.3m in 2020. After $837,000 of income tax and $35.3m of losses attributable to non-controlling interests, Melco’s net losses for the quarter were $233.2m – down from the $331.6m losses experienced in 2020.
Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) were $15.1m, up from $96.1m losses in 2020. Adjusted property EBITDA came to $31.9m compared with negative property EBITDA of $76.7m last year.
Although restrictions have eased significantly from 2020, the measures that have remained in Macau have affected Melco throughout the quarter.
In addition to travel restrictions and enforced quarantine protocols, new Covid-19 cases in the Special Administrative Region saw the closure of non-gaming entertainment sites and testing measures were also ramped up.
Further upheaval may come from the Macau government’s consultation on regulatory reform the gambling sector which proposes major changes to the industry.
“Continued travel restrictions and quarantine measures in Macau and the region negatively impacted our third quarter operating and financial performance,” Melco chairman and CEO Lawrence Ho said. “To preserve our cash and liquidity, we continue to enforce strong cost control discipline in respect to both operating expenses and capital expenditures.
“Thanks to strong participation in our “Get the Jab” vaccination incentive campaign, Melco’s vaccination rate in Macau has reached close to 95%.
“We look forward to further travel integration between mainland China and Macau, once Macau achieves an acceptable vaccination rate, and we remain fully committed to doing our part for the betterment of the community.”
Ho also mentioned that the company was discontinuing its pursuit for an integrated resort in Japan, following the city of Yokohama cancelling the application process.
He added: “The Japan opportunity didn’t work out for us and given the impact of Covid and the crisis isn’t over yet and by the end of it, it probably would have affected two years, three years of business. So I think for the next two years, three years, our primary focus is really on rebuilding our balance sheet.”
Melco has also undergone a share repurchasing, raising approximately $31m. This will aid Melco’s investments in Macau such as the construction of both the Studio City Phase 2 and City of Dreams Mediterranean resorts.
Ho added: “Additionally, we have recently repurchased approximately 3.1 million ADSs for approximately US$31 million. These share repurchases reflect the confidence we have in our company, our long-term strategy, and our future growth prospects.”