Operator News

China – Melco’s ‘strong financial performance in 2019’ leaves it ‘well-positioned’ to cope with COVID-19 outbreak

By Phil - 1 April 2020

Macau operator Melco International Development has seen a 10.5 per cent rise in profit over the last year to HK$1.8bn (US$232.2m), making it confident its ‘strong financial performance in 2019’ will leave it ‘well-positioned’ to cope with the effects of the COVID-19 casino closures.

Net revenues increased 10.5 per cent in 2019 to HK$45bn(US$5.81bn) with Adjusted EBITDA up 15.1 per cent to HK$12.5bn (US$1.61bn).

Lawrence Ho, Group Chairman and Chief Executive Officer of Melco International, said: “While 2020 will inevitably be dominated by the unfolding of the COVID-19 crisis, we enter this year of uncertainty in the best of financial and operational health. Our modest gearing ratio, recent cost cutting measures and CapEx deferrals allow us to maintain our regular dividend program and position us well to counter the hurdles posed by COVID-19. We are long-term thinkers and acutely aware that a rolling program of re-investment and improvement is key to retaining existing and attracting new guests. In 2019, this was proven by significant returns in both revenue and visibility from our iconic Macau hotel Morpheus which opened in mid-2018.

“Our big news is that work has begun on our next major landmark, Studio City Phase 2, centering around two striking hotel towers that will incorporate approximately 900 luxury rooms and suites. Meanwhile, renovation of Nüwa at City of Dreams was also started in early 2020. 2020 promises to be a very difficult year for global integrated resort operators. However, we expect our commitment to developing world-class hospitality and entertainment facilities will put us in a good position to bring the best experience to our guests, and will see us through the challenging times in the near future.”

City of Dreams is currently being upgraded through its Phase 3 development. After the opening of Morpheus in June 2018, renovation of Nüwa was recently started, and The Countdown hotel will also be redeveloped in the future and rebranded as Libertine.

City of Dreams Mediterranean is expected to become Europe’s largest premier integrated resort upon completion. With the launch of Cyprus Casinos in Limassol, Nicosia and Larnaca in 2018, and in Ayia Napa in July 2019, the last satellite casino in Paphos recently launched in February 2020.

Japan continues to be a core target for the Group. In September 2019, the Group announced its ‘Yokohama First’ policy and in December 2019, the Group submitted its integrated resort proposal to the Yokohama municipal government, and will continue to actively engage with the Yokohama officials to illustrate its plans.

Mr. Ho added: “In 2019, we took a big step forward in solidifying our position as a pioneer and innovator in premium travel, leisure and entertainment. Our commitment to excellence, desire to push boundaries and ability to set new standards translated to a strong performance across the board last year. That was despite the challenging operating environment in 2019, with global economic growth threatened by the Sino-US trade war, while the Asian markets were also impacted by the economic slowdown in China and social unrest in Hong Kong in the second half.”

“We took the decision to reassess our non-core investments as the Covid-19 outbreak began to affect tourism in Asia and the rest of the world. As we intend to focus on our key investments currently earmarked for Macau, Manila, Cyprus and Japan, we decided not to pursue our planned investment in Australia for the second tranche of shares in Crown Resorts Limited. We believe this decision can preserve our capital to be deployed on our core assets.”