Melco reports significant third quarter revenue increase
Melco Resorts and Entertainment, developer, owner and operator of Asian casinos, have reported a 14% year-on-year increase in revenue during the third quarter of the year.
Total operating revenues for the group as of September 30 increased to $ 1.44 billion (£ 1.12 billion / € 1.30 billion), this compares to the $ 1.24 billion recorded by the company’s revenue balance period in 2018.
The main source for the significant change for the quarter was the Melco’s City of Dreams casino in Macau, which earned a higher income on the site of $ 787 million. This represents an increase of 31.0% compared to the $600.9 million recorded the previous year. These revenues were mainly driven by chip table games and the mass market, according to the Australian Financial Review.
In addition, the other major contributor for Melco was the glamorous Macau Studio City resort, although its operating income fell slightly from $ 345.2 million to $333.7 million (3.3%) during the quarter. This was attributed to lower performance of the rolling chip segment.
In its other properties, earnings varied. The City of Dreams of Manila in the Philippines had a drop of 7.9% from $141.7m to $130.5m while The Altira Macao had a considerable increase of 26.3% year-on-year, increasing from $90.2m to $113.9m.
The operating income generated by the operations of electronic gaming machines located outside the casinos of Melco Mocha Clubs in Macao, recorded a slight increase from $28.5m to $29.5m. Cyprus casinos also made an extraordinary increase in revenue of 58.0% ($ 26.7 million).
After its parent company Melco International Development sold all its participation in ICR Cyprus Holdings to Melco Resorts in July, the financial periods reported had to be updated to include both the assets and liabilities and the financial results of ICR Cyprus.
Profits increase at Melco
As profits increased, the company’s total operating costs and expenses followed suit, which increased 9.8% year-over-year ($1.26 billion). This was mainly a result of the increase in operating costs of the casino, which had a total expenditure of $823.1m, in contrast to the $731.6 million recorded during the third quarter of 2018.
Development costs also increased sharply from $4.8 m to $30.4 m. Whole Melco recorded an increase in depreciation and amortisation, going from $134.6m to $140.6m.
Despite the increase in expenses, Melco was able to manage them with operating income registering an incredible increase of $ 175.2 million during the quarter, meaning a 104% increase compared to the $ 85.9m entered last year.
Melco’s pre-tax profit was $ 93.9 million, while in 2018 these revenues were at $10.8 million. The company’s net profit was $ 83.2 million, following recording a loss of $ 8.3 million, generated by properties in where they don’t not have a majority interest..
These numbers refer to a notable financial advance in comparison to the $11.3 million reported during the 3rd quarter of last year. Melco president and chief executive Lawrence Ho said that “during the third quarter of 2019, the fall of table games in the mass market of Melco and the handling of the gaming machine reached record highs.”
In May, Melco acquired a 19.99% stake in Australian gaming giant Crown Resorts. Under the agreement valued at approximately AUD $1.76 billion, Melco would purchase 135.35m shares of CPH Crown Holdings, with each share for price at $13.00AUD.
For the transaction to be finalised by its sunset date of 31 May 2020, Melco requires the NSW, Victorian and Western Australian regulators to approve the final purchase tranche of shares from Crown Resorts part-owner James Packer’s affiliated entity, Consolidated Press Holdings.