Kangwon Land reports KRW275bn loss in 2020 with casinos closed for most of year
Korean casino resort operator Kangwon Land swung to a KRW275.86bn (£179.9m/€206.2m/$250.2m) loss in 2020, after closures of its resorts were repeatedly extended due to the threat of the novel coronavirus (Covid-19).
The loss was mostly due to a steep drop in revenue, by 68.5% year-on-year to KRW478.58bn.
Despite expenditure falling 26.1% year-on-year, costs of sales totalling KRW544.5bn still exceeded revenue.
Of this total, KRW294.5bn came from casinos, down 36.2%, while KRW119.3bn came from hotels, down 17.3%. The operator generated a further KRW55.6bn from condo rentals, and KRW350.0m from its High1 ski resort.
This led to a gross loss of KRW65.9bn, compared to a KRW 783.4bn gross profit in 2019.
After paying general management fees of KRW140.7bn, plus KRW225.0bn towards developing abandoned mines into new resorts, Kangwon Land's operating loss came to KRW431.58bn. This compared with a KRW501.15bn profit in 2019.
The business reported a further KRW1.7bn in non-operating income and KRW56.6bn in financial income, but paid KRW47.6bn in non-operating costs for a pre-tax loss of KRW404.5bn. After receiving a KRW128.6bn income tax benefit, Kangwon land made a net loss of KRW275.86bn. This was down from a KRW334.66bn profit a year prior.
Looking only at the fourth quarter of the year, Kangwon Land’s revenue totalled KRW131.3bn, down 64.8%.
Of this total, KRW117.2bn came from casino gaming, a 64.7% decline, with the remaining KRW14.1bn from other sources, down 65.7%.
This KRW117.2bn in casino revenue was made up of KRW48.0bn in slot revenue; KRW45.8bn in general table game revenue and KRW32.6bn in VIP room revenue, minus KRW9.2bn in bonus funds.
In total, 122,532 players staked a combined KRW528.6bn at Kangwon’s casinos in Q4, down from 696,121 players in Q4 2019. Foreign customer traffic remained low, with just 566 players coming from abroad, compared to 8,124 in 2019.
Breaking down the KRW14.1bn in non-casino sales, the majority, at KRW9.0bn, came from hotels, while KRW2.3bn came from condos, KRW1.5bn from golf and KRW1.1bn from ski resorts.
Costs of sales, however, declined 35.2% to KRW153.2bn. These costs included KRW67.7bn in salary, down 25.7%, KRW12.6bn toward the Tourism Promotion Development Fund and KRW6.6bn in sales taxes.
This led to a gross loss of KRW21.8bn. After management fees, Kangwon Land’s operating loss was KRW76.1bn.
The operator made KRW19.6bn in financial income and KRW8.7bn in non-operating income, but paid KRW8.8bn in non-operating expenses for a pre-tax loss of KRW56.6bn. Kangwon Land’s net loss, after a KRW23.3bn tax benefit, came to KRW33.3bn.
The operator’s flagship venue in Jeongseong first closed on 23 February and though it reopened in July, it closed again less than two months later. Though this closure was initially meant to last for just two days, it ended up lasting almost two months.
It then closed again on 8 December.