Melco Resorts & Entertainment said it has delayed the opening of its new integrated resort on Cyprus due to issues with its contractor.
Chairman Lawrence Ho said the opening is now expected to be in 2Q23, as opposed to this year. He was speaking during an analysts call following the release of 2Q22 results.
The contractor for the City of Dreams Mediterranean project has struggled to resource the project and was not able to achieve some of the pre-agreed completion dates, he said.
For Q22, Macau-based Melco posted a net loss of $215.5 million, compared with a loss of $185.7 million in the year earlier period. Revenue fell 48 percent to $296.1 million.
The company’s operations were hard hit by the continuing Covid restrictions in Macau and China, while Ho said that its business in Cyprus and the Philippines has been gradually improving.
Melco operates the City of Dreams Manila, which has been running at full capacity since March 1st and has seen a swift recovery in domestic business. It also runs four small casinos across Cyprus.
Melco ex-Macau recovery on track
“In contrast to the challenges we have been facing in Macau, our businesses in the Philippines and Cyprus have been improving with volumes gradually recovering toward pre-COVID levels,” Ho said. “City of Dreams Manila has been operating at 100 percent capacity since March 1, 2022 and saw a fairly quick recovery in domestic business. International visitation continues to ramp up, and we expect to see further growth as more of the travel restrictions around Asia are lifted and travel returns to normal.”
Cyprus also saw a pick-up in volumes and profitability with a relaxation in COVID-19 related restrictions, he said.
In terms of recovery in Macau, its largest market, Ho said he is hopeful that the key Golden Week holiday in October will be a good month. All eyes at present are on the Communist Party Congress in October, which may provide further impetus for recovery.
China watchers have said they expect no relaxation in zero-Covid until after the Congress.
Executives on the call also discussed Melco’s efforts to resolve an auditing problem that may force the company to delist from the NASDAQ Stock Exchange.
In January the U.S. Securities and Exchange Commission (SEC) adopted final rules relating to the Holding Foreign Companies Accountable Act, which deem that a company’s audit report must be issued by a public accounting firm that can be inspected by the Public Company Accounting Oversight Board (PCAOB).
Melco is audited by Ernst & Young Hong Kong and the PCAOB has said it cannot conduct inspections in Hong Kong.
Executive Vice President and Chief Financial Officer Geoff Davis said the company had moved its audit office to Singapore, which is not affected by the Act.
He also said the company had been potentially looking at listing elsewhere and had been in talks with the Hong Kong Stock Exchange from where it delisted about seven years ago.
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