2019 was not kind to casino equipment manufacturer Paradise Entertainment. The company has finished crunching the numbers for last year, and the bottom line isn’t very attractive. Despite seeing a year-on-year revenue increase of 1.5%, the net profit attributable to shareholders almost completely countered what was seen a year earlier. Paradise reports that this figure was 98.4% lower than in 2018, reaching just $119,442. That has forced the company to reconsider several of its activities.
In 2018, Paradise, which focuses primarily on the Macau gaming market, saw revenue of about $149.64 million. This increased to $152.22 million last year due, in part, to an increase in sales of electronic gaming equipment. This segment jumped 91.5% compared to 2018, reaching $21.9 million as the company completed the sale of hundreds of new terminals. Accounting for the increased movement, along with money coming in from royalties and lease agreements, the gaming equipment segment provided Paradise with $22.9 million in revenue.
However, that increase was countered by a weaker return in another segment. Paradise operates a small handful of casinos and satellites in Macau, and “relatively high operating costs” at these venues caused some to see decreases in revenue. Casino Kam Pek Paradise had an 11.3% drop in gross gaming revenue compared to 2018, taking in just $163.83 million. However, Casino Waldo reported a year-on-year GGR increase of 8.6% as it took in $70.57 million. Operational expenses decimated the gains, though, and Waldo ultimately recorded a loss of $3.54 million in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).
This was the second year in a row that Waldo saw a negative adjusted EBITDA, and 2019’s loss was 13.9% greater than what had been reported a year earlier. With that in mind, Paradise felt that it was time to step away from the casino, and decided not to renew its management contract, which it held under the concession owned by Galaxy Entertainment Group.
Paradise said in a filing with the Hong Kong Stock Exchange that it stopped providing management services at the casino on March 1 when its contract expired a day earlier. It added, through a separate press release, that the decision was a result of changes made to the Macau gaming scene and the “recent requirement to invest further for additional monitoring system and equipment to Casino Waldo. It added that the investment was too expensive and that it “might not be recovered before end of the existing gaming concession.” It also pointed to the ongoing coronavirus pandemic and its impact on casino operations as a reason for stepping away from Waldo.
The company was given approval last year to start to offer “self-developed slot machines.” This would have most likely been able to give the company a huge boost this year; however, COVID-19 has wiped out virtually any chance of that happening. The slot machines have already started to be rolled out in several regions, including South East Asia and the Americas, but the virus will prevent any major advances, most likely, for the rest of the year.
