Lotte Tour Development achieved its highest-ever profit in the first quarter of this year.
According to the first-quarter business report disclosed on the 14th, Lotte Tour Development announced that it recorded an all-time high sales performance of 106.227 billion KRW, resulting in an operating profit of 8.791 billion KRW.
After posting its first profit of 341 million KRW in the third quarter of last year, Lotte Tour Development experienced a temporary setback with an operating loss of 9.294 billion KRW in the fourth quarter (sales of 92.729 billion KRW). However, it quickly achieved the largest quarterly profit in history in the first quarter of this year, marking a definite turnaround.
EBITDA (earnings before interest, taxes, depreciation, and amortization), which indicates a company's profit-generating ability, also surged 135.1% from 12.341 billion KRW in the previous quarter to 29.009 billion KRW.
The major driver behind the large-scale profit turnaround in the first quarter was the sharp growth in the casino sector.
Dream Tower Casino, the foreigner-only casino at Jeju Dream Tower Complex Resort, recorded sales exceeding 70 billion KRW (70.08 billion KRW) for the first time in the first quarter, fueled by three consecutive months of over 20 billion KRW in sales since the beginning of the year.
This represents a 34.5% increase compared to the fourth quarter of last year (52.065 billion KRW) and a vertical rise of 328% compared to the first quarter of last year (16.357 billion KRW).
Alongside this, the travel business sector completely recovered from the COVID-19 shock, posting sales of 17.92 billion KRW in the first quarter, a 58.4% increase compared to 11.316 billion KRW in the same period last year.
Lotte Tour Development emphasized, “Not only has the core casino business made a full-fledged leap forward, but the traditional travel sector also demonstrated strong resilience, resulting in the highest quarterly profit since the company's founding in 1971. We have confirmed significant potential in cash generation ability, the most important indicator of a company's future value.”
However, financial costs outside of operating activities, such as interest expenses due to high interest rates and temporary foreign exchange losses caused by currency fluctuations, remain challenges.
Despite the large operating profit turnaround, Lotte Tour Development recorded a net loss of 38.432 billion KRW in the first quarter.
This was due to the application of record-high market interest rates on a collateral loan of 700 billion KRW extended for one year in November last year, causing quarterly interest expenses to surge from 7.6 billion KRW to 12.9 billion KRW. Additionally, the exchange rate soared to 1,350 KRW, resulting in a foreign exchange loss of 4.3 billion KRW. Furthermore, a corporate tax of 5.1 billion KRW was reflected due to the large profit of Dream Tower Casino (LT Entertainment).
Lotte Tour Development stated, “Building on the profit turnaround trend, we plan to complete long-term, low-interest refinancing with commercial banks under favorable conditions before November, in line with the interest rate reduction trend. From the second quarter, with a significant expansion of direct overseas flights to Jeju, casino and hotel revenues are expected to increase further. If refinancing succeeds and interest expenses decrease significantly, net profit is also expected to turn positive.”
With the full-scale expansion of direct flight routes from major Chinese cities, the largest contributors to Jeju's tourism industry, a second wave of the “Youker Boom” is expected to be recreated starting in June.
On the 7th, Shenzhen Airlines resumed thrice-weekly flights between Shenzhen, known as China's Silicon Valley, and Jeju, opening direct routes from four of China's five wealthiest cities except Guangzhou. Additionally, direct flights to Harbin twice a week from June 15 and to Dalian twice a week from June 16 will resume.
According to Henry Partners, a global immigration consulting firm, direct flights are already operating to Beijing (17 times weekly), Shanghai (58 times weekly), and Hangzhou (10 times weekly), among the world's top 50 wealthiest cities.
Moreover, the Tokyo route, ranked second among the world's millionaire cities, is set to resume in July, and preparations are underway to restore the Guangzhou route, suggesting that all air routes connecting Jeju and wealthy East Asian cities will soon be open.
A Lotte Tour Development official said, “During the Super Week period in early May, a large influx of Chinese and Japanese tourists led to a special boom in the casino. From June, when Jeju Airport's international flights are expected to operate more than 175 times weekly, greater sales growth is anticipated across all sectors, including hotels and casinos.”
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