Universal Entertainment Corp, the parent company of Okada Manila, has reported substantial declines in sales and profit for the first half of 2024. The company’s struggles are largely attributed to a slowdown in the junket business, which has negatively impacted its casino operations in the Philippines. Additionally, Universal has faced challenges in its pachinko segment, particularly with a decline in pachinko machine sales.
Performance of Okada Manila
Okada Manila, located in the Entertainment City precinct in Parañaque, has experienced a significant downturn in performance for the first six months of 2024. The company reported a 13.1% drop in net sales, totaling JPY41.7 billion (US$284 million). Operating profit also fell drastically by 55.1% to JPY3.28 billion (US$22.4 million), and Adjusted Segment EBITDA decreased by 22.3% to JPY11.7 billion (US$79.8 million).
The primary issue impacting Okada Manila’s performance has been a decline in the number of VIP guests. This reduction is a direct result of the slowdown in the junket business, which has adversely affected the overall market conditions for the casino industry in the Philippines.
Despite these challenges, certain sectors of Okada Manila’s operations are showing positive trends. The mass market and gaming machine sectors, while down from the previous year, have shown improvement compared to pre-pandemic levels in 2019. The hotel and food and beverage businesses, in particular, have seen a steady influx of guests, contributing to a more stable performance in these areas.
Struggles in the Amusement Equipments Business
The Amusement Equipments Business, which encompasses the pachinko and pachislot segments, has also faced difficulties. Sales in this sector fell by 32.6% to JPY20.8 billion (US$142 million). Operating profit in the Amusement Equipments Business decreased by 51.1% to JPY3.76 billion (US$25.6 million).
Within this sector, the pachislot machines have performed better than pachinko machines. The company highlighted that smart pachislot machines, which have been well-received by pachinko hall operators, continue to drive strong sales. In contrast, the pachinko segment has struggled, particularly with the recent introduction of machines featuring a lucky trigger function. Although these machines offer players a higher chance of winning more balls, their sales have been slower compared to the robust performance of pachislot machines.
Group-Wide Financial Declines
On a group-wide level, Universal Entertainment Corp has reported a 20.7% decline in sales, totaling JPY62.9 billion (US$429 million). Net income attributable to owners of the parent company fell dramatically by 97.5%, down to JPY525 million (US$3.6 million). This sharp drop in net income reflects the significant challenges faced across the company’s various business segments.
Universal Entertainment Corp’s financial results for the first half of 2024 reveal a challenging period for the company. The slowdown in the junket business has notably impacted Okada Manila’s performance, while the Amusement Equipments Business continues to face difficulties, particularly in the pachinko segment. Despite these setbacks, there are positive indicators within specific sectors, such as the mass market and hotel services, which may provide a foundation for recovery. The company will need to address these issues and adapt its strategies to navigate the ongoing challenges in the gaming and amusement industries.