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2Q26 Earnings(Consolidated) |
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Greetings from Kangwon Land!
Before we begin, please note that these figures are preliminary and prepared for your convenience prior to the external audit. Some details might change during the process, and since this includes forward-looking statements, the actual results could differ from our current outlook. Figures are presented in KRW billions (Wbn). Now, let me walk you through our consolidated results for the second quarter of 2026, starting with the key performance highlights. Quarterly revenue came in at 345.6wbn (-4.2%). Operating expenses remained flat YoY, resulting in an operating profit of 43.2wbn (-26.2% YoY). However, driven by solid non-operating performance—including gains from financial assets—net profit grew 59.8% YoY to 100.3wbn. On a margin basis, our operating profit margin stood at 12.5%, with a net profit margin of 29.0%. For 1H26, cumulative revenue reached 724.5wbn (-0.4% YoY), operating profit reached 112.1wbn (-15.6 YoY), and net profit totaled 140.0wbn (1.9% YoY). Looking at our revenue in detail, let's start with the casino segment. Gross gaming revenue(GGR) declined 3.4% YoY to 349.1wbn. Mass revenue dropped 2.4% YoY to 281.8wbn, mainly due to decreases in visitation (-3.5%) and drop amount (-3.9%). In the VIP floor, despite increases in visitation (+18.0%) and drop amount (+7.2%), revenue declined 7.6% to 67.4wbn, dragged down by unfavorable hold rate. Consequently, net gaming revenue, which reflects High1 Point (Complimentary points) deductions and includes casino F&B sales, totaled 319.9wbn, down 3.5% (or –11.7wbn) YoY. Moving on to the non-gaming segment, which includes our hotels, condos, ski, golf, water park and other facilities. 2Q non-gaming revenue totaled 25.7wbn, down 12.3.% (or -3.6wbn) YoY. The primary reason for this decline was a drop in hotel/condo room revenue caused by ongoing room renovations. Since March of this year, the company has been renovating a total of 757 aging rooms(477 rooms in the Grand Hotel Main Tower and 280 rooms in the Mountain Condo). Renovations are scheduled to be completed by 4Q27 for the condo and 1Q28 for the hotel. Operating expenses totaled 302.4wbn-combining CoGS 268.5wbn and SG&A 33.9, remained flat (+0.1wbn) YoY. Breaking down the key cost line items: ① 3 casino funds and taxes—including the Abandoned Mine Region Development Fund, Tourism Promotion Fund, and Consumption Tax—totaled 98.4wbn (-3.5%). As a reminder, these statutory levies applied to GGR stand at 13% for the Abandoned Mine Development Fund, 10% for the Tourism Promotion Fund, and 5.2% for the Individual Consumption Tax. ② Labor costs came in 91.8wbn (-6.3%), mainly driven by a reduction (-7.3wbn) in performance-based bonus following the annual government evaluation. ③ Depreciation increased 14.5% YoY to 22.2wbn, reflecting capitalized safety engineering cost for ground stabilization within the resort complex. ④ Other operating expenses stood at 89.9wbn (+8.3% YoY), driven by modest increases in dues and taxes, operating supplies, and outsourced services. Non-operating profit increased 317.1% YoY to 96.7wbn (+37.8wbn), reflecting ① Fair-value gain from financial asset came in 97.3wbn (+128.7%) ② Donation expense came in 1.9wbn (-90.1%), mainly due to the payment shift. We advanced the donation payment to 1Q this year, wherease it was executed in 2Q last year, resulting in a decrease of 2Q donation expense (-17.6wbn). We’ve allocated a total investment budget of 145.4wbn for 2026 to drive continuous top-line growth and ensure our sustainable growth and so far, we’ve executed 87.2wbn. Ongoing projects include guestroom renovations, VIP floor remodeling, the 2nd casino constructions. Under the 2024-2026 shareholder return policy, the Company targets a dividend payout ratio of at least 50% and total shareholder return ratio - inclusive of dividends and buybacks - of 60%. As part of this commitment, we plan to repurchase 20wbn worth of treasury shares in 2H26, with specific timing to be disclosed immediately upon the Board approval. Regarding our current treasury stock inventory(15,746,696 shares), the company is prioritizing retirement while also carefully evaluating potential disposition options. The final decision will be made by the Board within the statutory deadline (September 5, 2027) mandated by the amended Commercial Law. That concludes our 2Q26 result update. We will continue our efforts on driving revenue growth, managing our costs efficiently, and enhancing shareholder value. If you have any further questions, please don't hesitate to contact the IR at +82-33-590-3204 or 3209. Thank you very much. |
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265 high1-gil, Jeongsun-kun, Gangwon State. Korea
