Macau casino operator Galaxy Entertainment Group (GEG) has trimmed its operating costs to the bone, based on its view that the global gambling hub’s prolonged downturn may be far from over.
Figures published last week show GEG generated revenue of HK$1.15b (US$148.7m) in the three months ending June 30, down 91% from the same period last year and 77% worse than the sum generated in Q1 2020. GEG reported an earnings loss of HK$1.37b versus a HK$4.3b gain in Q2 2019.
Net gaming revenue accounted for HK$276m (-97.5% year-on-year) of Q2’s overall tally, more than twice as much as non-gaming revenue (HK$130m, -90%), but the company’s construction materials division easily trumped both of its rivals with HK$747m (+4.3%). Gaming accounted for nearly 85% of Q2 2019’s revenue total, leaving the company very glad that to have its construction unit’s cash flow during the current crisis.
VIP gambling turnover was down 96.2% to just HK$6.7b in Q2, while VIP gross revenue slid 95.7% to HK$315m. The VIP revenue stat would have been even worse had VIP win rate not risen 0.6 points to an outsized 4.7%, continuing the company’s recent trend of playing extremely lucky against its high-rollers.
Mass market table drop fell 97.4% to HK$782m while mass win rate slid 6.3 points to 17.6%, pushing mass table revenue down 98.1% to HK$138m. Electronic gaming suffered declines in both handle and win rate, resulting in revenue falling nearly 95% to just HK$32m.
GEG vice-chair Francis Lui said the company had reduced its daily cash burn from US$3.4m in Q1 2020 to $2.5m in the most recent quarter. GEG has been doing its best to avoid staff redundancies, relying on its extremely healthy balance sheet (HK$43.6b in net cash versus NK$6.2b in total debt as of June 30) to ensure staff don’t starve during the slowdown.
With China having recently begun to relax its mainland travel restrictions, GEG is also pressing forward with plans to expand its flagship Galaxy Macau property, with Phases 3 and 4 expected to open mid- to late-2021, although the company cautioned that this could change if the pandemic continues to disrupt the importation of the needed construction materials.