Japan’s Universal Entertainment posts $102.5M FY24 loss as machine sales and VIP play drops

The pachinko and casino operator, based in Tokyo, Japan, reported a net loss of $102.8 million (JPY15.6 billion/£82.5 million/€99 million) from net sales of $834 million, a 29.4% drop. Operating profit plummeted 90.1% to $19.8 million.

UEC attributed the downturn to a slide in VIP gaming at Okada Manila in the Philippines capital and a sharp decline in pachinko and pachislot machine sales in Japan.

Post-pandemic adjustment

Okada Manila posted net sales of $541.4 million, down 15.4% from 2023 as VIP gaming lagged. Despite increased footfall at the integrated resort, gaming revenue plummeted 21.8% to $599.4 million.

“The slowdown of the junket business negatively affected the overall market conditions for the casino business in the Philippines,” UEC stated in its financial report, issued on 13 February.

“Although sales in the mass market and gaming machine category has steadily increased overall since the pre-pandemic peak sales of this business in 2019, their performance in the fiscal year 2024 was down from the previous year when demand significantly rebounded following the pandemic.”

UEC also pointed to higher personnel expense at the IR, and “a foreign exchange gain as the Japanese yen continued to depreciate against US dollar”.

However, it added: “In the hotel and food and beverage businesses, the number of guests is consistently high and revenue continues to increase.”

A slump in gaming machine sales

In Japan, meanwhile, sales in UEC’s gaming-machine division fell 46.3%.

“Our strategy was to concentrate the release and sale of several major titles in the second half of the year,” stated UEC. However, a number of new products stalled in the testing phase and were pushed to 2025. As a result, sales volume in the second half of 2024 was limited to 49,000 units, with total sales of 92,000 pachislot and pachinko units.

UEC expressed optimism about the near term. “The game elements of smart pachinko machines are to become richer. The emergence of hit titles (will lead) to the revitalisation of the market” and UEC’s market share.

According to the Jakota Index, UEC anticipates a return to profitability in 2025, with projected net revenue of $990.3 million.

In the plus column

Overall, the Philippines broke records for gross gaming revenue last year, thanks in large part to online games. The sector reaped $6 billion, exceeding initial government targets of $5.75 billion, significantly higher than the $4.9 billion generated in 2023.

Also in the plus column, Okada Manila just won the Forbes Travel Guide’s 5-star designation for the fifth consecutive year. Forbes hailed the IR as “the sparkling jewel in Manila’s crown”. Attractions include the Fountain, the largest multicoloured dancing water feature in the world, and Cove Manila, Southeast Asia’s largest entertainment space. The club under a giant glass dome features a 8,395-sqft butterfly-shaped swimming pool.

Such attractions, as well as increased marketing and promotions, will “enable us to attract a broader range of local guests who live in the Philippines as well as tourists from Japan, South Korea and other Southeast Asian countries,” UEC said.

“In addition, we will work to penetrate our new online gaming platform targeting Philippine locals and conduct extra promotion through our membership programme.”