Melco swings to Q1 loss, remains committed to development plans

Melco Resorts & Entertainment swung to a loss in Q1 due to the impact of the coronavirus, but said it remains committed to its development plans, including a bid for a license in Japan.

The Macau-based operator said total revenue dropped 41 percent to $0.81 billion, 

Adjusted Property EBITDA was US$75.3 million, down 82 percent, while the net loss was $364 million, compared with a profit of $120.1 million in the same period a year earlier.

The company attributed the loss to the Covid-19-imposed shutdown of Macau’s casinos, coupled with the required social distancing measures now in place and ongoing travel restrictions.

Although Macau’s casinos are open, visitation is minimal with the border effectively closed. 

Melco CEO Lawrence Ho thanked the Macau and Mainland Chinese government for their efforts to contain the spread of the virus in the company’s results announcement. He said Melco has cash and equivalents of $1.2 billion and has undrawn capacity on a revolving credit facility of about $1.6 billion It also shored up its balance sheet with the recent sale of a stake in Crown Resorts for $355 million.

“Melco remains committed to its global development program,” Ho said. “Construction on the expansion of Studio City is progressing. Upon completion, it will offer approximately 900 additional luxury hotel rooms and suites, one of the world’s largest indoor/outdoor water parks, a Cineplex, fine-dining restaurants and state-of-the-art MICE space. In Europe, we are developing City of Dreams Mediterranean, which, upon completion, will be Europe’s largest integrated resort with 500 luxury hotel rooms, a 1,500-seat amphitheater and approximately 10,000m2 of MICE space.” 

“Lastly, Japan continues to be a core focus for us. We believe our focus on the Asian premium segment, a portfolio of high-quality assets, devotion to craftsmanship, dedication to world-class entertainment offerings, market-leading social safeguard systems, established track record of successful partnerships, culture of exceptional guest service, and commitment to employee development puts Melco in a strong position to help Yokohama realize the vision of developing a world-leading IR with a unique, Japanese touch.”

The group has decided to suspend its dividend program in light of the results.

City of Dreams Macau saw revenue decline to US$467.6 million compared to US$713.3 million in the first quarter of 2019, in particular due to softness in the mass market.

Rolling chip volume was US$8.65 billion for the first quarter of 2020 versus US$10.25 billion in the first quarter of 2019. Mass market table games drop decreased to US$0.57 billion in the first quarter of 2020 compared with US$1.32 billion in the first quarter of 2019. 

Revenue at City of Dreams Manila dropped to $110.3 million from $142.4 million, with rolling chip volume down by half to $1.16 billion. Mass market table games drop decreased to US$156.9 million for the first quarter of 2020, compared with US$184.3 million in the first quarter of 2019.