Galaxy revenue down 29 percent in 15Q3

Galaxy Entertainment Group posted revenue of $12.3 billion and adjusted EBITDA of $2.1 billion in 15Q3, year-on-year declines of 29 percent and 36 percent respectively, after experiencing bad luck in gaming operations.

According to Bernstein Research, the results were in line with expectations. The company is showing a slow shift to the mass market as its Galaxy Phase 2 ramps up, with mass now accounting for only 51 percent in total gross revenues, it said in a note. 

The company attributed part of the 3Q decline to bad luck in gaming operations which reduced its adjusted EBITDA by approximately $131 million, otherwise Adjusted EBITDA would have been 6 percent higher on a normalized basis, it said. 

Galaxy Macau recorded revenue of $8.7 billion, down 22 percent year-on-year, though up 9 percent quarter-on-quarter. The property’s adjusted EBITDA was $1.7 billion, down 30 percent YoY and up 19 percent QoQ. Galaxy Macau’s non-gaming revenue rose 92 percent YoY to $742 million.

Lui Che Woo, chairman of GEG, said the company’s increase in revenue was “very solid,” with the market showing signs of stabilization.

“GEG’s balance sheet remains strong with virtually no debt and generates solid free cash flow.  Given the encouraging results during Golden Week in early October and the positive supportive comments made by the Government we are cautiously optimistic that we are starting to see the market stabilize.”

“Spending behavior in Macau remains cautious, but we are very confident in the longer term outlook and prospects for Macau and for GEG specifically and we are well positioned for the longer term success.”

The company added that a stronger mass and non-gaming focus has resulted in a shift in revenue mix.

“Our efforts have resulted in increasing our mass, slots and non-gaming revenue mix from approximately one third of total revenue in Q3 2014 to approximately one half in Q3 2015 on a management basis for our Macau operations with upside as we continue to ramp up our recent resort openings and add new amenities.”