Universal suffers significant Q1 decline amid casino delays, pachinko struggles

 

 

 

Japanese pachinko manufacturer and integrated resort operator Universal Entertainment Corporation has announced net sales of ¥10.99 billion (US$99.2 million) for the three months to 30 June 2017, down 46.1% year-on-year amidst a torrid time for the company.

 

Operating loss was ¥9.83 billion compared with an operating profit of ¥2.49 billion in the prior period with net loss attributable to owners of the parent at ¥6.79 billion compared with net income attributable to owners of the parent of ¥6.89 billion last year.

 

The results represent the first quarter under Universal’s revised fiscal year, which will run for nine months only in 2017 to 31 December as opposed to the previous period which ran from 1 April to 31 March.

 

Universal attributed multiple factors to the negative results, primarily ongoing construction work at its Okada Manila property in Manila’s Entertainment City precinct, which it says has suffered some delays from the recent attacks on Resorts World Manila.

 

“Following the fire at Resorts World Manila, the Casino Resort Business is currently proceeding carefully on a high alert on security with construction work and is heading towards the full operation in stages under the close oversight of the Philippine Amusement and Gaming Corporation (PAGCOR), a government entity that regulates casinos,” the company said.

 

“Work is proceeding quickly to complete the construction of Okada Manila.”

 

Universal saw net sales in its pachislot and pachinko business fall 64.3% to ¥6.99 billion, with an operating loss of ¥3.49 billion compared with an operating profit of ¥6.88 billion in the same period of the previous consolidated fiscal year.

 

“Japan’s amusement machine industry is becoming smaller due to issues such as the removal of machines with highly gambling characteristics and the enactment of new standards for machines,” the company said.

 

“To reduce the impact of these events on pachinko hall operators, Universal Entertainment is developing and selling highly appealing Pachislot and Pachinko machines that offer wholesome entertainment and can attract more customers.”

 

Universal also addressed a number of issues currently impacting the company, including an ongoing lawsuit with Wynn Resorts stemming from founder Kazuo Okada’s split from the US gaming giant in 2012, as well as the company’s ongoing investigation into Mr Okada amid allegations he improperly used Universal funds for his own benefit in 2015.

 

“The company made the decision on June 8, 2017 to establish a Special Investigation Committee concerning alleged improper activities at an overseas subsidiary associated with former directors of the company,” Universal said.

 

“The purpose of forming this committee is to perform thorough and objective examinations using professional skills in order to determine all facts involving this matter and to implement preventive measures. The committee is currently conducting examinations based on these objectives.

 

“Since the Special Investigation Committee has not submitted a report, no facts have been confirmed that can be used for determining any effects of the alleged improper activities. As a result, this matter is not reflected in the consolidated financial statements. However, this matter will have no effect on the consolidated financial statements because the company expects to recover money that the overseas subsidiary transferred to third parties.”

 

 

Source:  Asia Gaming Brief