Melco's Cyprus casino posts record EBITDA as Macau flagship stumbles
The company's net income fell to nearly zero in the third quarter as VIP results in Macau weakened.
Melco Resorts & Entertainment reported near-zero net income for the third quarter of 2026 as its Macau operations faltered. Group revenue declined by 10% to US$1.17 billion, while adjusted property EBITDA fell to US$287.6 million. Operating income was US$100.2 million, less than half the figure from a year earlier. Adjusted net income attributable to the company was approximately US$6.5 million, a sharp drop from US$83.7 million in the same period last year. Earnings per American depositary share were just US$0.00009.
The poor performance was driven by a significant downturn at the flagship City of Dreams Macau property. Rolling chip volume there fell to US$4.63 billion and the VIP win rate dropped to 2.49%. Management told analysts that unfavourable VIP luck at the property reduced property EBITDA by about US$14 million. More favourable VIP results in Manila and Sri Lanka added roughly US$2 million each, resulting in a hold-adjusted group EBITDA of about US$298 million.
In contrast, the company's European business in Cyprus achieved its highest quarterly EBITDA on record. Mass-market gross gaming revenue at the Limassol resort and its satellite casinos grew 21% to US$50 million. Slots revenue increased by 5% to US$38 million, despite negative VIP revenue for the segment. This growth provided Melco with a unique position among major Macau operators as the owner of a large European casino.
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"The Cyprus growth contrasts with the falls in Macau, where both the flagship property and the wider market weakened over the period."
The broader Macau market also showed signs of softening during the quarter. Casino gross gaming revenue fell 10% year-on-year in October to MOP21.68 billion. The government's full-year forecast for 2026 is MOP236 billion in GGR. For the first ten months of the year, the market's total GGR reached MOP208.80 billion, representing a 1.6% increase.
Melco continued to manage its debt during the quarter, completing two major bond repayments. The company retired a US$600 million bond issue ahead of its 2027 maturity in September. In July, it repaid US$165 million of bonds that were due in 2028. Total debt, net of financing costs, stood at US$6.98 billion at the quarter's end. The company also returned cash to shareholders, buying back about 33.1 million ADSs for US$160 million between July and early November. Looking ahead, company executives indicated a strategic shift in Macau, aiming to avoid heavy reinvestment to attract players. They plan to use a player-club model with limits to protect operating margins. The company also suggested that dividend payments could resume around the end of 2027.