COVID-19 impact sees Galaxy Entertainment Group fall to HK$1.37 billion Adjusted EBITDA loss in 2Q20


Galaxy Entertainment Group (GEG) slipped to an Adjusted EBITDA loss of HK$1.37 billion (US$177 million) in the three months to 30 June 2020, down from a profit of HK$4.33 billion (US$559 million) in 2Q19 on a 91% fall in net revenue to HK$1.15 billion (US$148 million).

The massive declines are in line with those being experienced by all of Macau’s gaming operators as a result of COVID-19, which saw tight border restrictions in place throughout the quarter.

Releasing its second quarter and half year results on Thursday, GEG revealed that group-wide gross gaming revenue (GGR) on a management basis declined 97% year-on-year and 91% sequentially to HK$485 million (US$62.6 million). The decline included a 98% drop in mass table GGR to US$138 million (US$17.8 million), 96% in VIP GGR to US$315 million (US$40.6 million) and 95% in electronic gaming machine GGR to US$32 million (US$4.1 million).

“COVID-19 had an adverse impact on our financial results in Q2 and in the first half of 2020, as Mainland China, Hong Kong and Macau faced travel restrictions and social distancing,” said GEG Chairman, Lui Che Woo.

“These restrictions resulted in a significant reduction in visitor arrivals and subsequent decline in revenue. With minimal revenue and ongoing staff costs, the Group’s Adjusted EBITDA was negative HK$1.4 billion for the second quarter.

“We are pleased that Macau and Guangdong have taken the critical step in creating a travel bubble followed most notably, by the reinstatement of the Individual Visit Scheme (IVS) and group travel.

“Despite these important positive early steps, it is premature to comment on how quickly the market may recover. Going forward we expect to experience further head winds from the pandemic, which will have an adverse impact on our financial performance.

“However in the medium to longer term, we continue to remain optimistic in the outlook for Macau in general and GEG specifically.”

Reflecting the wider group performance, flagship property Galaxy Macau reported an Adjusted EBITDA loss of HK$1.18 billion (US$152 million) versus a profit of HK$3.24 billion (US$418 million) a year ago, adding that good luck in gaming operations boosted Adjusted EBITDA for the quarter by around HK$12 million (US$1.5 million).

GGR at Galaxy Macau fell 97.6% to HK$329 million (US$42.2 million) while hotel occupancy across its five hotels was a mere 4%.

Likewise, StarWorld Macau reported an Adjusted EBITDA loss of HK$306 million (US$39.5 million) with GGR of HK$103 million (US$13.3 million), while mass-only property Broadway Macau reported an Adjusted EBITDA loss of HK$52 million (US$6.7 million) on GGR of just HK$1 million (US$129,000).

City Clubs contributed Adjusted EBITDA of HK$2 million in 2Q20 (US$258,000), down 93% year-on-year and 88% quarter-on-quarter, with GGR of HK$52 million (US$6.7 million).



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