South Korean casino operator Kangwon Land managed to boost its Q1 profit despite falling sales, which analysts are taking as a sign the venue may finally be on the rebound.
Last week, Kangwon Land released its Q1 earnings report, which showed overall sales falling 0.3% year-on-year to KRW 377.5b (US$318.4m), while gaming revenue totaled KRW329b in the three months ending March 31, a 1.2% decline from the same period last year. Operating income was down 0.7% to KRW125b.
Despite these declines, the property reported net profits rising 13.3% to KRW102.4b as margins improved 3.2 points to 27.1%. The profit was the best result in over a year, and the Q1 gaming revenue figure, while down year-on-year, was the highest recorded over the past four quarters.
The sequential revenue improvement was largely due to the property’s ‘Membership Club,’ aka VIP gambling, which shot up 12.7% year-on-year to KRW61.2b. By contrast, mass market table games were down 0.4% to KRW 164b while slot machines were off 5.6% to KRW 137b. Overall table drop was up 1.1% to KRW1.57 trillion. Total non-gaming revenue improved 6.4% to KRW48.4b.
Kangwon Land is the only South Korean casino where local residents are legally able to gamble at slots and tables. The property reported a 2.1% rise in overall visitation in Q1, despite the number of foreigners crossing its threshold falling 8.8%.
As befitting its unique status, Kangwon Land has been subjected to a barrage of new responsible gambling requirements, including limits on the number of hours its casino floor may operate, a reduction in its number of mass tables and mandatory ‘cooling off’ periods for gamblers who have demonstrated an inability to self-impose limits on their activity.
Analysts expressed hope that Kangwon Land’s Q1 rebound may indicate the property has turned the corner after its annus horribilis, which also included a number of its former executives prosecuted for a variety of operational misdeeds.