Melco Resorts & Entertainment (MRE) results for the second quarter of the year could not be worse, after the closures of its casinos in Macao, Cyprus and Philippines due to the coronavirus pandemic. The operator released the figures thursday showing a loss of more than $ 368 million.
During the period, MRE-generated revenue was less than $ 178 million, representing a nearly 80% drop compared to the second quarter of last year.
The company’s performance was overshadowed by posting a negative profit of $ 156.3 million compared to the $ 448 million profit it made in 2019. In addition to a net loss of $ 368.1 million compared to a profit of $ 101, 8 million.
Second quarter results were slightly higher than the loss of $ 364 million trailing in the first quarter. The main cause of this decrease was the closure of its properties in Macao for 15 days due to covid-19. This situation has affected all casinos in Macau as travel restrictions from mainland China have resulted in a decrease in players visiting the special region.
MRE casinos had a substantial decrease compared to VIP clients, in addition to the overall market turnover. But the situation of the individual MRE casinos was totally different with respect to the few VIP clients that remained.
Altira Macau reported a VIP win rate of 6.19%, while that of City of Dreams was 6.13%. This is almost twice the upper limit of the expected range. Although Studio City’s win rate decreased only 0.17%.
When it comes to mass market board games, drastic drops in volume were reported in all areas. However, City of Dreams’ massive win rate remained flat. The other properties had a less favorable performance. Altira saw its massive profit cut in half (11.3%), while Studio City fell 7 points to 22.2%.
Negative earnings for City of Dreams were – $ 70.3 million, Altira’s – $ 19.4 million, and Studio City – $ 42.3 million. Only the Mocha Clubs slot segment posted positive results, recording a profit of $ 4.4 million, down from $ 5.3 million in 2019.
Cyprus and the Philippines with red numbers too
In the Philippines the situation was no better. City of Dreams Manila’s revenue for the second quarter fell 96% ($ 7.2m), generating negative earnings of $ 22.6m. The company’s casinos in Manila were ordered to close in march and they have not been reopened since. The reopening of the arcades is expected to be announced in the coming weeks.
Also, revenue from MRE’s temporary and satellite casino in Cyprus decreased 84% to $ 3.5 million with negative earnings of $ 6 million. None of the properties generated VIP income because the turnover barely reached $ 200,000 with a profit rate of -23.1%.
The massive profits from the table fell by half. Only the slots that had a medium yield saved the operations in Cyprus.
The CEO of MRE, Lawrence Ho, decided to suspend the distribution of dividends and design a plan to strengthen the company’s financials by increasing the availability of cash. Ho noted that MRE remains committed to expanding Studio City despite the difficult situation, while continuing to pursue an integrated resort license in Japan.
Regarding the situation of the casinos in Macau, MRE executives revealed that the number of players in the gaming halls is low. Sometimes it is possible to “find less than 20 people” in them.
Although visits to Macau have been increasing with the issuance of visas from mainland China, the company has preferred to focus on the premium mass rather than the “base” mass of players. MRE says that for now “large volumes” are not required to keep up with its competitors.