Melco maintains growth aspirations following first quarter slump

Melco Resorts and Entertainment has maintained its strategic focus on securing various strands of global expansion, as the developer and operator also heaps praise on Macau’s leadership during the health crisis.

As covid-19 continues to have an effect on the company’s operations, financial position and prospects during the second quarter of 2020, following a series of Q1 decreass, Melco has moved to issue updates on developments and construction currently underway.

With closures impacted the group’s entire portfolio, Philippines casino gaming operations remain shutdown during this time, despite a government implemented modified enhanced community quarantine, while the projects at Studio City and City of Dreams Mediterranean gain extended construction time frames. 

Lawrence Ho, chairman and CEO of Melco, explained: ““Melco remains committed to its global development program. Construction on the expansion of Studio City is progressing. Upon completion, it 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.

“In Europe, we are developing City of Dreams Mediterranean, which, upon completion, will be Europe’s largest integrated resort with 500 luxury hotel rooms, a 1,500-seat amphitheater and approximately 10,000m2 of MICE space.”

Before reasserting Japanese aspirations: “Lastly, Japan continues to be a core focus for us. We believe our focus on the Asian premium segment, a portfolio of high-quality assets, devotion to craftsmanship, dedication to world-class entertainment offerings, market-leading social safeguard systems, established track record of successful partnerships, culture of exceptional guest service, and commitment to employee development puts Melco in a strong position to help Yokohama realise the vision of developing a world-leading IR with a unique, Japanese touch.” 

Total operating revenues for the first quarter of 2020 were $811.1m, representing a decrease of approximately 41 per cent from $1.38bn for the comparable period in 2019. 

The decrease was primarily attributable to softer performance in all gaming segments and non-gaming operations as a result of the temporary casino closure in Macau and enhanced quarantine and social distancing measures to mitigate the COVID-19 outbreak.

Operating loss for the first quarter of 2020 was $149.9m (2019: $191.1m), adjusted property EBITDA fell to $75.3m (2019: $413.5m) and net loss attributable to Melco stood at $364m (2019: $120.1m).

Ho commented: “With COVID-19 posing unprecedented challenges to the tourism industry and integrated resort facilities around the world, I would like to express my sincere gratitude to the PRC and the Macau SAR governments for their proactive response to contain the spread of the virus. I would also like to thank the Macau Chief Executive for his decisive leadership, which is exactly what we need in these difficult times. 

“Melco continues to manage its balance sheet in a prudent manner. As of March 31, 2020, we had cash and cash equivalents of over US$1.2bn. With the entry into a new senior facilities agreement in April 2020, we have undrawn revolver capacity of approximately US$1.6bn. 

“In addition, we further bolstered our balance sheet with our sale of the shares we held in Crown Resorts Limited, resulting in gross sales proceeds of approximately US$355m. To preserve liquidity in light of the COVID-19 pandemic and to continue investing in our business, the board has decided to suspend the company’s quarterly dividend program. 

“This is a prudent course of action given current conditions. Melco remains committed to returning capital to shareholders with a regular quarterly dividend and will evaluate the resumption of its quarterly dividend as the operating environment evolves. While we are focused on managing costs during this challenging demand environment, we remain fully committed to the long term development of our valued colleagues. A

“s an employer of choice with a strong and deep heritage in Macau, we believe that our long-term success is dependent on the hard work and dedication of our colleagues, and the development of Macau into a world-leading tourism and entertainment destination.

“Our commitment to employee development and community support is evidenced by our market-leading training programs and our recent donations to the Red Cross Society of China Hubei Branch, the Macao Federation of Trade Unions, the Women’s General Association of Macau, the Cyprus Ministry of Health and to the affected families and healthcare professionals in the Philippines.”