Due to the sluggish recovery of tourists from the Philippines and intensified competition in the casino sector, S&P Global has announced a downgrade in the outlook for Japan's Universal Entertainment from "stable" to "negative". The report indicates that the market environment in which Okada Manila operates continues to deteriorate, with recovery progress far below expectations.
S&P Global analysis states that the slow growth in the number of international tourists to the Philippines, coupled with increasingly fierce competition among local integrated resorts, has put pressure on the operations of Okada Manila. The rating agency expects Okada Manila's EBITDA for the next year to be approximately 24 billion yen (about 166 million USD), with only slight growth.
Additionally, the pachinko and slot machine business under Japan Universal Entertainment is also under profitability pressure. Although the company is developing new machines in an attempt to capture the market, it faces compliance risks. If the products fail to meet the latest regulatory requirements, it could affect sales performance. S&P expects the EBITDA for this business in the fiscal year 2025 to be 11 billion yen (about 76 million USD).
The report also points out that by the end of March 2025, Japan Universal Entertainment's cash and deposits have dropped from 40 billion yen in the same period last year to 21 billion yen, nearly halved. Although it is not yet in breach of financial covenants, key cash flow indicators are showing signs of fatigue, reflecting that the company's recovery momentum is not as expected.
To improve the situation, the company has launched measures including strengthening non-gaming businesses and cutting costs, in an attempt to stabilize overall operational performance.
