Macau has bounced back since reopening in full last January when all remaining pandemic measures were dropped. Melco referenced this as one of the main reasons behind full-year growth in 2023, with this carrying over into Q1.
Analysing Q1, Melco reports improvements in all gaming segments and non-gaming operations. This, it says, was largely driven by a continued recovery in in-bound tourism to Macau during the period.
Revenue was higher across all segments as a result of the reopening, with this reflected by an improved performance by all properties.
Chairman and CEO Lawrence Ho says the goal for Melco is to continue this trend into Q2 and beyond. He referenced a shift in management, including David Sisk stepping down as chief operating officer for Macau, and restructure of its sales force as initiatives put in place to support these plans.
“We have had an eventful year so far,” Ho said. “Our improving results in March and April reflect the marketing initiatives we have implemented and the new business we have generated since the management changes in late February.
“We continue to focus on providing our patrons with the best premium experience available in Macau and lead the market in all areas of our business.”
Casino revenue nears $1.00bn in Q1
Breaking down the Q1 performance, casino was again the main source of revenue for Melco. For the three months to 31 March, casino revenue hit $913.3m, up 63.4% year-on-year.
Rooms revenue was also up 72.0% to $100.8m, while food and beverage revenue climbed 79.6% to $66.1m. A further $32.1m was noted in entertainment, retail and other revenue, up 45.3%.
Going property-by property, revenue from the City of Dreams in Macau was 53.8% higher at $550.9m. This came following a better performance in all gaming segments and non-gaming operations.
Revenue at the Studio City, also in Macau, hiked 133.1% to $331.4m, following a similar growth pattern to the City of Dreams. Elsewhere, Altira Macau revenue was up 43.7% to $34.2m, while revenue from Mocha and other operations revenue edged up 6.3% to $31.9m.
Outside Macau, revenue from the City of Dreams Manila in the Filipino capital slipped 17.0% to $110.7m. Melco put this down to a softer performance in the rolling chip segment.
Turning to Europe and the three satellite casinos Melco operates in Cyprus in conjunction with City of Dreams Mediterranean – revenue from this segment jumped 88.5% to $52.4m.
“City of Dreams Manila in the Philippines has continued to show solid results in the mass segment but was impacted by luck factors in VIP,” Ho said.
“City of Dreams Mediterranean and our satellite casinos in Cyprus exhibited positive cash flow through the first quarter despite continued conflicts in the region. We are cautiously optimistic that we can expand our business into the seasonally strong summer months.”
Melco back in the black despite higher costs
Spending-wise, operating costs were 37.8% higher at $987.1m. Higher costs were reported across several key areas including casino ($609.8m), general and administrative ($127.0m) and depreciation and amortisation ($131.8m).
Non-operating expenses were also 17.2% higher at $121.1m for Q1. However, such was the impact of revenue growth, that Q1 pre-tax profit was $4.2m, in contrast to last year’s $102.9m loss.
Melco paid $3.7m in tax but also benefitted from $14.6m in profit from its non-controlling interests. As such, net profit for the quarter amounted to $15.2m, compared to an $81.3m loss in 2023.
In addition, adjusted property EBITDA for Q1 amounted to €298.8m, an increase of 56.6% on the previous year.
“We are extremely optimistic about the continued growth of gaming, entertainment and leisure in Macau and expect to maintain our leadership position with our exceptional portfolio of products,” Ho said.
Original article: https://igamingbusiness.com/finance/quarterly-results/melco-returns-to-net-profit-as-macau-recovery-drives-revenue-up-in-q1/
