Q3 results 2020

Macau travel restrictions continue to hit Melco in Q3

3 minutes read
Asian land-based giant Melco Resorts saw revenue fall 85.2% to $212.9m in the third quarter of 2020, and reported a $386.9m loss with travel restrictions in Macau continuing to impact earnings.

Casino was the largest contributor to the operator’s Q3 revenue, though its $170.8m total represented a 86.3% decline.

Hotel rooms revenue dropped 82.9% to $15.2m, and food and beverages 77.4% to $13.4m.

A further $13.6m in revenue came from entertainment, retail and other sources, down 72.3%.

The City of Dreams resort in Macau remained Melco’s leading property, but revenue plummeted by 88.4% to $91.4m. Studio City, which it part-owns, brought in just $30.8m, down 90.1% and Altria Macau revenue fell 90.8% to $11.0m.

Its City of Dreams Manila resort in the Philippines fared better, bringing in $43.4m, down 66.8%.

Its Cyprus operations – comprising a temporary casino as it constructs City of Dreams Mediterranean – was the most resilient business unit, bringing in $20.5m, down 23.2%.

Melco’s Mocha Clubs chain of cafe-style gaming machine venues brought in $11.5m, down 61.7%.

Lawrence Ho, chairman and chief executive of Melco, said that while the business had started to recover from a second quarter in which revenue dropped to $189m, it still had a long way to go.

“Covid-19 and the subsequent travel restrictions continue to have a significant negative impact on our operating and financial performance,” Ho said. “Despite that, our integrated resorts experienced a moderate recovery in business levels during the third quarter, benefiting from the partial resumption of casino operations in Cyprus and Manila, as well as the gradual resumption of visa issuances by the Mainland Chinese authorities under the Individual Visit Scheme.”

This revenue was dwarfed by $487.9m in operating expenses, down 61.4%.

These costs led to a $275.7m operating loss, compared to a $175.2m operating profit in 2019.

All of Melco’s operations except those in Cyrpus, which made an operating profit of $2.4m, reported losses for the period.

Total non-operating expenses of $110.3m, up 35.7%, led to a $385.3m pre-tax loss, compared to a $93.9m pre-tax profit in 2019.

After $1.6m in income tax, Melco’s net loss was $386.9m, compared to a $92.6m profit in Q3 2019.

Ho added that Melco remains committed to building an integrated resort in Japan.

“Turning to Japan, I want to highlight our unwavering commitment to bring to the country the best IR the world has ever seen,” he said. 

“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, a culture of exceptional guest service, and a continuing commitment to employee development puts Melco in a strong position to help Japan realize the vision of developing a world-leading IR with unique Japanese touch.

However, he said the operator has been forced to be patient due to a series of delays to the process. 

“The process in Japan has been substantially delayed and remains complex,” he said. “We will continue to be patient as we evaluate the landscape to ensure that Melco pursues the right opportunity that takes advantage of Melco’s core strengths to drive strong value creation.”

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