Universal Entertainment of Japan posts significant loss for FY24

Universal Entertainment Corporation (UEC), a leading player in the Japanese gambling sector, has reported a staggering 30% decline in net revenue for fiscal 2024, largely due to a downturn in VIP gaming activity at its Manila integrated resort and a notable dip in gaming machine sales domestically.

The Tokyo-based pachinko and casino operator recorded a net loss of $102.8 million (JPY 15.6 billion/£82.5 million/€99 million) from net sales totaling $834 million, reflecting a significant 29.4% decrease. Additionally, operating profit plummeted by 90.1%, amounting to just $19.8 million.

UEC has pinpointed the decline in VIP gaming at Okada Manila in the Philippines and the sharp drop in pachinko and pachislot machine sales in Japan as the primary catalysts for this downturn.

Post-Pandemic Market Adjustments

In its financial disclosures, UEC reported that Okada Manila generated net sales of $541.4 million in 2024, a 15.4% reduction from 2023, primarily attributed to weakening VIP gaming numbers. Although the integrated resort saw increased foot traffic, overall gaming revenue fell by 21.8%, totaling $599.4 million.

“In our financial report, released on 13 February, we acknowledged that the stagnation of the junket business adversely impacted the overall landscape of the casino sector in the Philippines,” UEC stated.

Despite a consistent upward trend in mass market sales and gaming machines since the pre-pandemic peaks of 2019, fiscal year 2024 saw a decline as demand faltered compared to the previous year’s post-pandemic resurgence.

Moreover, UEC highlighted rising personnel costs at the integrated resort, along with a foreign exchange gain due to the Japanese yen’s continued depreciation against the U.S. dollar. Nevertheless, it noted positive trends in the hotel and food and beverage sectors, where guest numbers remained robust, contributing to revenue growth.

Significant Decline in Gaming Machine Sales

In Japan, UEC’s gaming machine division experienced a dramatic 46.3% drop in sales. The company planned to focus the launch and sale of several major gaming titles in the latter half of the fiscal year; however, delays in product development restricted their market entry, pushing some new releases back to 2025. Consequently, the sales volume during the second half of 2024 amounted to just 49,000 units, reaching a total of 92,000 pachislot and pachinko machines sold.

Despite these challenges, UEC remains optimistic about the imminent future. “The innovative game features integrated into smart pachinko machines are poised to enhance the player experience. We believe that the introduction of popular titles will rejuvenate the market and bolster UEC’s market share,” the company reaffirmed.

According to the Jakota Index, UEC projects a return to profitability by 2025, anticipating net revenues of approximately $990.3 million.

Positive Developments in the Sector

On a broader scale, the Philippines’ gaming industry achieved record-breaking performance last year, thanks in large part to the expansion of online gaming offerings. The sector amassed an impressive gross gaming revenue of $6 billion, exceeding initial government projections of $5.75 billion and significantly surpassing the $4.9 billion generated in 2023.

In further positive news, Okada Manila was awarded the esteemed 5-star designation from Forbes Travel Guide for the fifth consecutive year, earning accolades as “the sparkling jewel in Manila’s crown.” This recognition is partly attributed to its standout features, including the Fountain, which boasts the title of the largest multicoloured dancing water feature globally, and Cove Manila, the largest entertainment venue in Southeast Asia, featuring an expansive 8,395-square-foot butterfly-shaped swimming pool beneath a grand glass dome.

These captivating attractions, combined with enhanced marketing strategies and promotional efforts, are envisaged to draw a broader spectrum of local guests and tourists from Japan, South Korea, and other Southeast Asian nations. UEC further aims to tap into a new online gaming platform targeting Filipino locals, supplemented by additional promotion via its membership program.