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Okada Manila sees 1Q20 loss grow as COVID impacts mass gaming business

Philippines integrated resort Okada Manila posted an operating loss of JPY1.72 billion (US$16.0 million) on the back of a 23.7% decline in Adjusted segment EBITDA to JPY2.17 billion (US$20 million) for the three months to 31 March 2020, impacted by a reduction in visitation and subsequent suspension of operations in March due to COVID-19.

While net sales fell by only 6.3% year-on-year to JPY15.71 billion (US$145.8 million), parent company Universal Entertainment Corp reported a significantly increased loss for its Philippines IR from JPY512 million (US$4.8 million) in 1Q19.

Publishing its first quarter financial results on Friday, Universal revealed a 4.4% decline in VIP rolling chip turnover at Okada Manila to Php125.24 billion (US$2.48 billion) but a substantial 25.4% fall in mass table drop to Php3.50 billion (US$69.2 million). GGR for the quarter was down 9.3% to Php8.64 billion (US$171.0 million).

Universal said that Okada Manila had been tracking well until its operations were suspended, “mainly because of the patronage of guests who live in the Philippines.

“The hotel occupancy rate was very high in the first quarter until the suspension began,” it said.

Despite the impact on its integrated resorts business, Universal’s group-wide net sales soared by 80.1% year-on-year to JPY40.77 billion (US$378.3 million), with a net income of JPY3.12 billion (US$28.9 million) for the quarter versus a loss of JPY4.09 billion (US$37.9 million) in the prior year period.

Driving the improvement was the company’s pachinko and pachislot business, where net sales increased 358.5% to JPY24.73 billion (US$229.5 million) with an operating profit of JPY9.51 billion (US$88.2 million) compared with a loss of JPY227 million (US$2.1 million) in 1Q19.

While Universal noted the impact of COVID-19 on its 1Q20 business was relatively small, it said it expects a far greater impact on second quarter results with Okada Manila still closed and pachinko halls in Japan having briefly suspended operations through May.

The company said it is currently creating a business resumption plan for Okada Manila in order to restart operations as soon as casinos in the Philippines are allowed to reopen.

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