Japan’s Universal Entertainment Corp posted a 12.9% year-on-year increase in net sales to JPY52.54 billion (US$495 million) and a narrowed operating loss of JPY3.85 billion (US$36.3 million), down from JPY6.93 billion, in the cumulative quarter to 30 June 2019 due to the ramp of Philippines integrated resort Okada Manila.
Net loss attributable to owners of the company was JPY9.04 billion (US$85.2 million) compared to net income attributable to owners of the company of JPY172.54 billion due to Universal having last year signed its settlement agreement with Wynn Resorts which resulted in JPY74.47 billion in interest income and JPY158.80 billion in gain on redemption of stock through 2Q18.
The improvement in operating results during the latest quarter was almost entirely on the back of Okada Manila, where net sales increased 45.2% year-on-year to JPY31.42 billion (US$296 million) – narrowing the operating loss from JPY3.04 billion to JPY1.82 billion. Adjusted segment EBITDA soared from JPY290 million in 2Q18 to JPY4.97 billion (US$46.8 million).
“At Okada Manila, the highest priority is to continue adding attractions and amenities,” Universal said.
“Work is continuing on Hotel Tower B to add more hotel rooms and some rooms in this tower became operational in July 2019. More rooms will help support continued growth in the Integrated Resort Business as well as better position the resort to host large group events and foreign tour groups. Adjusted segment EBITDA margin is expected to continue to expand during 2019 as sales growth lowers fixed cost as a percentage of sales.
“VIP casino revenues are expected to continue growing driven by the addition of new junkets, and more demand from existing junkets. Mass market table and gaming machine revenue is expected to continue growing as the property continues to ramp up and new casino marketing initiatives continue to be implemented and improved.
“Increasing number of hotel rooms, retail outlets and other amenities are expected to drive additional visitation and mass market casino revenues.”
Universal’s pachinko and pachislot business saw net sales decline 15.6% to JPY20.20 billion through 2Q19 but operating profit climb 191.1% to JPY2.97 billion. The company said it has responded to strict new rules governing the industry in Japan and low approval rate of new titles due to strict compliance testing of new machines by selling major pachislot and pachinko titles that can “earn the support of a broad range of users and energize Japan’s pachislot and pachinko market.”