Galaxy revenues squeezed by sluggish economy and competitive pressures

Galaxy Entertainment reported full year net revenues at US$51.9 billion, down 6 percent year-on-year, while Adjusted EBITDA was US$16.5 billion, down 2 percent year-on-year. The final quarter of 2019 contributed to these soft results.

The flagship Galaxy Macau and StarWorld Macau both saw declines in revenues and profitability in 2019, with only Broadway Macau making progress over the 2018 figures.

As for the reasons for the relative decline, Galaxy cited “geo-political and economic issues such as Sino-US trade tensions, a slowing world economy, introduction of the VIP smoking ban, RMB fluctuation, continuing competition from regional markets and disruption in Hong Kong.”

Bernstein Research added that some decline was anticipated by analysts “due to ramp up of newer Cotai properties such as Melco’s Morpheus Tower and MGM Cotai,” which added enhanced competitive pressures.

VIP revenues have fallen particularly sharply.

Galaxy still possesses plenty of reserves, noting that as of the end of the year, “cash and liquid investments were US$52.3 billion and net cash was US$51.7 billion. Total debt was $0.6 billion.”

Turning to Japan development, the company stated, “We view Japan as a great long term growth opportunity that will complement our Macau operations and our other international expansion ambitions. GEG, together with Monte-Carlo SBM from the Principality of Monaco and our Japanese partners, look forward to bringing our brand of World Class Integrated Resorts to Japan. We continue to strengthen our Japan Development team and build our resources as we move forward in the Integrated Resorts process.”