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China – Melco reduces operating loss as EBIDTA bounces back at all its Macau casinos

By - 27 July 2021

Melco Resorts generated operating loss for the second quarter of 2021 of US$128.1m, compared with operating loss of US$370.8m in the second quarter of 2020.

Total operating revenues for the second quarter of 2021 were US$566.4m, representing an increase of approximately 222 per cent from US$175.9m for the comparable period in 2020. The increase in total operating revenues was primarily attributable to an improved performance in all gaming segments and non-gaming operations as a result of a year-over-year increase in inbound tourism in Macau.

Melco generated Adjusted Property EBITDA of US$79.1m in the second quarter of 2021, compared with negative Adjusted Property EBITDA of US$156.3m in the second quarter of 2020.

Net loss attributable to Melco Resorts & Entertainment Limited for the second quarter of 2021 was US$185.7 million, or US$0.39 per ADS, compared with net loss attributable to Melco Resorts & Entertainment Limited of US$368.1m, or US$0.77 per ADS, in the second quarter of 2020. The net loss attributable to noncontrolling interests was US$34.8m and US$58.7m during the second quarters of 2021 and 2020, respectively, all of which were related to Studio City, City of Dreams Manila and the Cyprus Operations.

Lawrence Ho, Chairman and Chief Executive Officer, said: “We are pleased to see a progressive recovery in business levels during the second quarter of 2021 in our integrated resorts, despite the challenges that we have faced as a result of the COVID-19 pandemic and related travel restrictions. Mass and premium mass market players have proven to be the primary drivers of the recovery this quarter and are expected to be going forward as we continue to dedicate our resources toward these segments of the market. We remain optimistic on our Macau market outlook, especially as Macau explores scenarios for more flexible travel with other cities in the Greater Bay Area.”

In Macau, Melco’s mass table games operation, which contributes the vast majority of its EBITDA, saw another quarter of sequential improvement. Continuing the trend from last quarter, Melco delivered positive property EBITDA at each of its Macau operations with a more than 10 per cent increase and GGR and a nine times growth in EBITDA.

The period benefitted from May Golden Week with pent-up demand seeing revenues from the first five days of Golden Week, hitting 50 per cent of 2019 levels. Melco said it experienced similar levels of strong growth driven by its premium mass market and premium direct businesses.

In the Philippines, its gaming and hospitality operations at City of Dreams Manila were closed for the month of April due to government and post quarantine measures. It subsequently reopened at 50 per cent capacity on May 1 and has seen a strong recovery in pent-up demand, especially led by mass-market patrons. It has opted to reposition some of its gaming space from VIP to premium mass.

Mr. Ho added: “We applaud the Macau government’s measured approach to reopening the border and schemes to boost the economy and support local jobs. In this regard, we continue to prioritize epidemic prevention measures to keep our colleagues and customers safe, while working collaboratively with small and medium enterprise partners to contribute to Macau’s sustainable development and economic recovery. Through the efforts of the government, we are fortunate that vaccines are readily available. With colleague immunity established as a key company objective to ensure a safe environment for colleagues, guests and the community, Melco is supporting the government’s efforts towards community-wide vaccination. We have earmarked close to MOP 16 million towards a special “Get the Jab” immunity incentive program to encourage our colleagues to become fully vaccinated. To date, almost 65 per cent of our colleagues in Macau and Hong Kong have been vaccinated.

“Melco remains committed to its investment program in Macau and abroad. In Macau, construction on the expansion of Studio City is progressing. In May, the Macau government granted an extension to the development period for the construction of Studio City Phase 2 to December 27, 2022. Studio City Phase 2 will offer approximately 900 additional luxury hotel rooms and suites, one of the world’s largest indoor/outdoor water parks, a Cineplex, fine-dining restaurants and state-of-the-art MICE space. On May 22, 2021, the Studio City Water Park officially opened, welcoming guests to one of the most exciting water adventures in the region. At City of Dreams Macau, our facility upgrade works are ongoing, where we are adding more suites and guestrooms to Morpheus while the Countdown was closed at the end of March 2021 for a full renovation. The newly renovated Nϋwa tower re-opened at the end of March 2021.

“In June and July 2021, Melco Resorts Finance and Studio City Finance successfully listed US$2.25bn, in aggregate, of senior notes on the Chongwa (Macao) Financial Asset Exchange. Melco is committed to supporting the Macau SAR’s plans to diversify the economy and hope that the listing of these bonds will contribute to the development of Macau’s bond market and financial platform. These notes were previously listed on the Singapore exchange and are now dual-listed on both the Singapore and Macau exchanges.

“In Europe, the development of City of Dreams Mediterranean continues, with a target opening in summer 2022. The project, upon completion, will be Europe’s largest integrated resort with approximately 500 luxury hotel rooms, approximately 10,000 square meters of MICE space, an outdoor amphitheater, a family adventure park, and a variety of fine-dining outlets and luxury retail.

“Turning to Japan, we remain committed to bringing a world-leading integrated resort there, and continue to pursue opportunities within the market where we remain actively engaged with our partners. COVID continues to present challenges for the country in terms of process timing and travel, but the development of the integrated resorts industry in Japan has continued to move forward. We remain convinced that Japan represents the best potential new gaming market globally and that the quality of our assets and our focus on the premium segment is a great fit for the country’s tourism development. We remain patient and continue to maintain our disciplined approach with respect to all development activities, including in Japan.

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