Melco is looking toward a recovery as it reported a loss of $750 million for the fiscal year 2022. The resurgence of the Macau market, historically a crucial segment of the company's revenue, would significantly benefit Melco, which has faced challenges since the Covid-19 pandemic began in 2020.
In its annual financial statement, Melco highlighted the end of testing requirements for visitors from mainland China, Hong Kong, and Taiwan. This change led to a remarkable 233% increase in gaming revenues in Macau, soaring from MOP3.5 billion in December 2022 to MOP11.6 billion in January 2023.
Melco CEO Lawrence Ho described the company’s current performance as “highly encouraging.” He noted promising early figures during the Chinese New Year celebration, which took place from January 22 to February 5. During this peak period, the company reported gross gambling revenue averaging MOP6 million per day.
After the holiday, Melco's performance remained stable, with February’s daily average volume matching January's. “This recent performance supports our continued belief in the return of pent-up demand and our view that Macau will continue to develop as a leading international destination for entertainment and leisure,” Ho remarked.
On January 1, 2023, Melco commenced its new 10-year concession, following the award of the license in November. Ho expressed gratitude for the consideration of their proposal and investments that aim to enhance their strength in entertainment and non-gaming attractions.
In the fourth quarter, Melco reported revenues of $337.1 million, down 30% from $480.6 million during the same period the previous year. Operating costs also decreased, declining 8% to $537 million from $585 million. This reduction was influenced by a 20.1% drop in casino costs, which fell from $286 million to $227 million, and a decrease in amortization gaming sub-concession costs from $14 million to $2 million. Additionally, food and beverage costs reduced from $22.7 million to $20.9 million, while room costs decreased from $12.6 million to $11.1 million.
Despite these cuts, the company experienced a 91.1% increase in operating losses for Q4, rising from $104.4 million to $199.5 million, while net losses increased from $159.9 million to $251.9 million during the same time frame.
For the entire year, revenue plummeted 32.8%, going from $2.01 billion to $1.35 billion by December 31. Most of this revenue came from casino operations, which saw a decline from $1.68 billion to $1.08 billion compared to the previous year. Revenue from food and beverages also fell from $97 million to $85 million, and room revenue decreased from $157 million to $116 million.
The overall operating loss for the year reached $743.1 million, with a net loss of $930 million. Revenue continues to be hampered by Covid-19 restrictions, including major lockdowns over the summer. “The decrease in total operating revenues was primarily attributable to the heightened travel restrictions in Macau and mainland China related to Covid-19 during the quarter,” Melco stated in its report.
