Melco Resorts Reports $98.2 Million Net Loss in Third Quarter

Melco Resorts & Entertainment, the manager of the City of Dreams Macau integrated resort, announced a net deficit of $98.2 million (£75 million/€82.9 million) for the third quarter. This was due to the ongoing limitations related to the COVID-19 pandemic, which continued to negatively affect its performance.

The total operating income for the three months ending September 30 was only $900,000, a significant decrease of 94.3% from $158.1 million in the same period last year.

The COVID-19 crisis nearly completely eliminated gaming and non-gaming income, bringing Macau’s tourism industry to a near standstill.

It wasn’t until late September that entry restrictions from mainland China, Hong Kong, and other areas into the Macau Special Administrative Region were eased, and visas were reissued. Macau’s travel restrictions and COVID-19 quarantine requirements (which have only recently begun to be loosened) also suppressed visitor numbers.

As a result, the provision of gaming-related services generated a loss of $16.5 million in the third quarter, compared to income of $96.7 million in the same period last year.

Room revenue dropped significantly by 88.1% to $2.6 million, food and beverage revenue declined by 73.1% to $4.6 million, and entertainment revenue decreased by 97.5% to $134,000.

Service fee revenue was cut in half from $10.5 million to $4.6 million, while shopping mall revenue was a mere $5.

The firm announced a total income of HK$20 million, with HK$319,000 originating from retail and other sources.

Overall operational expenditures in the current three-month period were HK$73.5 million, a decrease of 33.5% from the same period in the previous year.

General and administrative costs dropped by 56.8% to HK$15.2 million, while food and beverage costs also fell by 68.3% to HK$4.5 million.

Expenses related to gaming services increased by 29.8% to HK$7.4 million, while cost reductions were achieved in accommodations, entertainment, the shopping center, and retail. Depreciation and amortization expenses rose slightly to HK$41.5 million.

Despite cost reductions across the company, the substantial decline in income resulted in an operational deficit of HK$72.5 million, compared to a profit of HK$47.6 million in the third quarter of the previous year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was HK$30.2 million, down from HK$90.9 million in 2019.

Melco Resorts also reported HK$48.5 million in non-operating expenses, including HK$30 million in interest costs and HK$18.5 million in debt write-off losses, which in turn led to a pre-tax loss of HK$121.1 million, compared to a profit of HK$18.7 million last year.

The operator received a HK$36,000 income tax credit in the third quarter and earned HK$22.9 million from equity participation profits, but still recorded a net loss of HK$98.2 million, compared to a profit of HK$14.3 million in the same period of 2019.

Examining Melco Resorts’ annual results for the nine months ending September 30, total operating income was HK$25.5 million, a decrease of 94.4% year-over-year.

Despite the 39…

The COVID-19 outbreak had a significant impact on the company’s financial performance. Earnings from gaming-related services were nonexistent. With the exception of a substantial 88.5% rise in mall event income to $14.7 million, all other business segments experienced revenue decreases in the first nine months of 2020.

Operating expenses dropped by 26.0% to $254.1 million, but the decline in revenue led to an operating loss of $228.6 million for Studio City during this time frame, in contrast to a profit of $115.8 million in the previous year.

Total non-operating expenses reached $103.1 million, resulting in a pre-tax loss of $331.7 million, a significant decrease from a profit of $16.9 million in the prior year. Studio City received a $106,000 tax credit and generated $71.4 million in profit from equity interests, but this still resulted in a net loss of $260.1 million, compared to a profit of $12.8 million in the previous year.

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