Universal Entertainment Faces Deteriorating Earnings Amid Slow Recovery
Universal Entertainment Corp. (UEC) reported a significant decline in its financial performance for the first nine months of 2020. The Japanese gaming conglomerate faced deteriorating earnings as the global pandemic continued to impact its operations, particularly its integrated resort in the Philippines, Okada Manila. The company’s net sales and profit figures showed a substantial downturn compared to the previous year, highlighting the slow pace of recovery across its segments.
Group Performance Plummets in First Nine Months
Universal Entertainment’s net sales for the nine months ending September 30, 2020, fell by 49.3% year-on-year, totaling JPY85.9 billion. This sharp drop was accompanied by an even more drastic decrease in operating profit, which plummeted by 97.4% to just JPY1.6 billion. The company also registered a net loss of JPY9.3 billion for the period. This contrasts sharply with the JPY15.2 billion net profit it recorded in the same period of the prior year. The figures clearly reflect the severe economic challenges posed by the ongoing health crisis.
Looking at the third quarter alone (July to September 2020), the picture remained challenging but showed some minor improvements compared to earlier in the year. Net sales for Q3 reached JPY33.4 billion, a 41.5% decrease year-on-year. Operating profit for the quarter stood at JPY1.2 billion, down 84.4%. Net profit for Q3 was JPY2.0 billion, a decline from the JPY3.8 billion profit seen in the same quarter of the previous year.
Okada Manila Faces Major Headwinds
The operational woes of Universal Entertainment are largely attributed to its flagship integrated resort, Okada Manila, operated by Tiger Resort, Leisure and Entertainment Inc. (TRLEI). The resort was significantly affected by government-mandated closures and strict operational limitations. Okada Manila was temporarily closed from March 15 to August. Following this period, it only reopened to essential workers and a select number of guests. The slow pace of international travel resumption also hindered its recovery.
For the third quarter of 2020, Okada Manila’s net sales were JPY11.8 billion, a substantial 52.4% decrease from the previous year. Its adjusted segment EBITDA plunged by a staggering 97.2% to just JPY282 million. These figures underscore the immense pressure on casino operators in the Philippines. Travel restrictions and reduced visitor numbers continue to impede a return to pre-pandemic operational levels.
Outlook: Focus on Domestic Market Amid Continued Uncertainty
Universal Entertainment anticipates that its casino operations will continue to face significant challenges. International travel bans and ongoing health concerns are expected to keep visitor numbers low for the foreseeable future. Given this uncertain environment, the company plans to focus its efforts on its domestic pachislot and pachinko operations in Japan. This segment is seen as more stable in the current climate.
The overall recovery for Universal Entertainment remains protracted. The severe impact on its casino segment highlights the vulnerability of large-scale integrated resorts to global disruptions. While the company is adapting by shifting its focus, the path back to sustained profitability appears to be a long one.
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