Profit soars at Melco Resorts in third quarter
Asian gaming giant Melco Resorts and Entertainment has revealed a 14% year-on-year increase in revenue for the third quarter, while operating income more than doubled during the period.
Total operating revenue for the three months to September 30 2019 amounted to US$1.44bn (£1.12bn/€1.30bn), up from $1.24bn in the corresponding period last year.
Melco’s City of Dreams casino in Macau was its primary source of income in the quarter, with revenue at the site amounting to $787.3m, up 31.0% on $600.9m last year, boosted by the rolling chip and mass market table games.
Studio City, also in Macau, ranked second in terms of revenue for Melco, but saw its operating revenue slip 3.3% from $345.2m to $333.7m in Q3, due in part to a softer performance in the rolling chip segment.
Elsewhere, revenue from the City of Dreams Manila in the Philippines was down 7.9% from $141.7m to $130.5m, but revenue at the Altira Macau also increased 26.3% year-on-year from $90.2m to $113.9m.
Operating revenue from the Melco Mocha Clubs non-casino based operations of electronic gaming machines in Macau was up slightly from $28.5m to $29.5m, while revenue from Cyprus Casinos climbed 58.0% to $26.7m.
Melco noted that after acquiring a 75% interest in ICR Cyprus Holdings from its parent company, Melco International Development, in July, the reported periods were restated to include the assets, liabilities and financial results of ICR Cyprus.
In terms of spending, total operating costs and expenses were up 9.8% year-on-year to $1.26bn, primarily due to higher casino costs. Overall casino spend was $823.1m, compared to $731.6m in Q3 of last year.
Development costs also increased from $4.8m to $30.4m, whole Melco noted an increase depreciation and amortisation spend from $134.6m to $140.6m.
However, increased revenue meant that Melco was able to overcome this higher spend and post an operating income of $175.2m for the quarter, up by 104% on $85.9m last year.
After finance-related expenses of $81.3m, including $80.1m of income expenses, Melco's pre-tax profit stood at $93.9m, compared to $10.8m in the prior year. After a $8.3m loss attributable to entities in which it holds a non-controlling stake, plus income tax of $1.8m, its net profit stood at $83.2m, a significant improvement on the $11.3m posted in Q3 2018.
“During the third quarter of 2019, Melco’s mass market table games drop and gaming machine handle both reached all-time-record-highs,” Melco’s chairman and chief executive Lawrence Ho said.
“The third quarter also marked the 16th consecutive quarter of positive year-over-year growth in mass market table games drop, highlighting the strength in Macau’s mass gaming market and Melco’s leadership position in the city’s mass and premium mass gaming segments.”
Melco in May signed a definitive purchase agreement to acquire a 19.99% stake in Australian gaming operator Crown Resorts. The deal stated that Melco would purchase 135.35m shares from CPH Crown Holdings for a price of Aus$13.00 per share, valuing the agreement at approximately AUD$1.76bn.
Terms of the deal said one of Melco’s subsidiaries would conduct the transaction, with payments due on June 6 and either on or before September 30 this year. However, the process was delayed in August when the New South Wales (NSW) Independent Liquor & Gaming Authority launched an investigation into the deal.
Melco agreed to amend the deal to allow the NSW authority to complete an investigation into the transaction and other matters related to the seller.