Melco International Development Ltd, the parent company of Macau’s Melco Resorts & Entertainment, has reported a substantial narrowing of its financial losses for the first half of 2024. The company recorded a loss attributable to the owners of HK$253.2 million (US$32.5 million) for the six months ending 30 June 2024, a significant improvement from a loss of HK$733.2 million (US$94.0 million) during the same period in 2023. This positive shift was driven by a recovery in the company’s casino and hospitality operations, aided by increased inbound tourism to Macau.
Improved Financial Performance in 1H24
The financial results for Melco International show a promising trend towards recovery and growth. The company’s group-wide net revenue for the first half of 2024 reached HK$17.8 billion (US$2.28 billion), representing a year-on-year increase of 36.3%. In parallel, Adjusted EBITDA rose to HK$4.49 billion (US$576 million), up from HK$3.20 billion (US$410 million) in the first half of 2023. This marked improvement reflects the company’s strategic initiatives and the overall revival of the tourism and gaming sectors in Macau.
Despite these gains, the company did not recommend the payment of an interim dividend, likely as a conservative measure to maintain liquidity and financial flexibility amid ongoing market uncertainties.
Key Drivers Behind the Improved Results
Melco International attributed the narrowed loss and improved revenue to several key factors:
Recovery in Inbound Tourism
The easing of travel restrictions and a gradual return of international tourists to Macau have bolstered the performance of Melco’s casino and hospitality businesses. The increase in visitor numbers has directly contributed to higher gaming and non-gaming revenues, driving overall growth.
Expansion of Operations
The launch of Studio City Phase 2 in April 2023 and the opening of City of Dreams Mediterranean in mid-2023 have significantly expanded Melco’s operational footprint. These new properties have begun to ramp up operations, contributing to increased business volumes and higher revenue.
Strategic Initiatives
Melco International has implemented various strategic initiatives aimed at expanding revenue streams, enhancing profitability, and fostering sustainable growth. These initiatives include investments in workforce development and property enhancements across its core Macau properties—City of Dreams, Studio City, and Altira.
Higher Operating Expenses
While the company’s overall performance has improved, it has also faced higher operating expenses. These expenses are largely attributed to the increased business volumes and the costs associated with ramping up new operations. However, the growth in revenue has outweighed these additional expenses, leading to a narrowed net loss.
Focus on Macau and Global Expansion
Melco International’s core properties in Macau—City of Dreams, Studio City, and Altira—remain central to the company’s growth strategy. The company has made significant investments in these properties, focusing on workforce development and property enhancements to deliver premium experiences to its patrons. These efforts are geared towards reinforcing Melco’s position as a leading provider of luxury entertainment and hospitality in the region.
Looking ahead, Melco International expressed confidence in its long-term prospects across different regions. The company is poised to navigate near-term uncertainties and challenges with a prudent and agile approach, leveraging its robust operational base and strategic investments.
Performance of Melco Resorts & Entertainment
Melco Resorts & Entertainment, a subsidiary of Melco International in which the parent company holds a 51.69% stake, has also reported encouraging financial results. For the second quarter of 2023, Melco Resorts posted an Adjusted Property EBITDA of US$302.8 million, up 13.3% year-on-year. Moreover, the company reported a net income of US$21.4 million for the quarter, a notable turnaround from a net loss of US$23.4 million in the same period in 2023.
Melco Resorts continues to operate its flagship properties in Macau, including City of Dreams and Studio City, along with City of Dreams Manila in the Philippines and City of Dreams Mediterranean in Cyprus. The company is also preparing for its latest venture, City of Dreams Sri Lanka, which is currently in the fit-out stage.
Strategic Investments and Future Outlook
Melco International’s strategic investments in its properties and workforce are key to its continued success. By enhancing its offerings and expanding its footprint, the company aims to capture a larger share of the growing luxury entertainment market. The company’s commitment to delivering unparalleled experiences to its patrons underscores its focus on long-term growth and profitability.
Despite the positive trends, Melco International remains cautious about the near-term outlook. The company recognizes the potential challenges posed by external factors such as economic uncertainties, regulatory changes, and shifts in consumer behavior. However, its strong financial position and strategic focus provide a solid foundation to navigate these challenges and capitalize on emerging opportunities.
Melco International Development Ltd has made significant strides in narrowing its losses and achieving strong revenue growth in the first half of 2024. The company’s strategic initiatives, combined with a recovering tourism market and expanded operations, have positioned it well for future growth. As Melco continues to invest in its properties and workforce, it remains focused on delivering exceptional experiences and driving sustainable profitability in the years ahead.