Gaming | Galaxy reports 61% revenue crunch, while Melco’s falls 41%

Melco Resorts & Entertainment reported its unaudited financial results yesterday showing revenue fell 41% in year-on-year terms to $810 million (MOP6.4 billion) in the first quarter of 2020. Meanwhile, its adjusted earnings before interest, taxation, depreciation and amortization (adjusted EBITDA) fell by 82% year-on-year to $75.3 million.
The news follows the financial disclosure of Galaxy Entertainment Group, which showed revenue dropped 61% in the first quarter to HKD5.1 billion ($658 million), while the adjusted EBITDA plummeted 93% to HKD283 million over the same period.
The Macau concessionaire’s flagship property, Galaxy Macau, saw revenue fall by 62% year-on-year to HKD3.5 billion, while StarWorld Macau registered a 66% decrease in revenue to HKD1 billion. Mass market project Broadway Macau saw net revenue drop 65% in the first quarter to just HKD53 million.
These financial results were disclosed in a summary filed with the Hong Kong Stock Exchange on Wednesday.
In the summary, Galaxy said that it remains “well-capitalized” amid the current business environment and that it is able to “effectively control costs.” The casino operator also said it has sought to “spread the impact of Covid-19 fairly across all team members as we prefer not to engage in redundancies.”
Last month, analysts at JP Morgan Securities (Asia Pacific) estimated that Galaxy had enough financial liquidity to weather up to six years with “near-zero revenue.”
In the filing, Galaxy said it had cash and liquid investments worth HKD51.9 billion, and their net cash was HKD47.5 billion as of March 31, 2020. Meanwhile, Melco CEO Lawrence Ho assured that his casino operator continues to “manage its balance sheet in a prudent manner” with some $1.2 billion in cash and cash equivalents (HKD9.3 billion).
Macau casino operators have all had significant drops in revenue in the first quarter of 2020, caused by the onset of the novel coronavirus and the travel restrictions that followed.
Gross gaming revenue for the entire territory was down 60% year-on-year in the first quarter, down to just 30.5 billion patacas, according to data provided by the Gaming Inspection and Coordination Bureau. At the same time, visitor arrivals have fallen nearly 70% to 3.2 million.
January accounted for the vast majority of first quarter gaming revenue and visitor arrivals.
At the start of February, local casinos were ordered to suspend operations for 15 days to help curb the transmission of the virus. Since reopening, customers from mainland China, the largest source market for Macau gamblers, have mostly kept away because of quarantine requirements for re-entering Guangdong Province.
In the filing, Galaxy noted that the “outlook for the foreseeable future is difficult to forecast.”
“This is due to a lack of certainty around immigration, travel and quarantine restrictions associated with Covid-19. The Individual Visit Scheme and group tours to Macau are still suspended, and on returning to the mainland, visitors are required to undergo 14 days of quarantine. Until we have visibility on these variables it is difficult to predict the shorter-term outlook for Macau,” Galaxy explained in the report.