Fitch downgrades Universal Entertainment’s outlook amid fiscal strain
Fitch Ratings has downgraded its outlook for Japan’s Universal Entertainment Corporation from Stable to Negative, pointing to weaker financial performance and uncertainty surrounding its recovery strategy in the Philippines.
While the company’s ‘B-’ Long-Term Foreign-Currency Issuer Default Rating (IDR) remains constant, the and continued business pressures.
The announcement, dated 28 July 2025, followed Fitch’s evaluation of the company’s Q1 results. Central to the downgrade was the ongoing underperformance of Universal’s integrated resort, Okada Manila. Although the Philippine gaming market as a whole has seen strong growth in the first half of 2025, Universal has yet to benefit fully. Weaker-than-expected foot traffic in both VIP and mass-market segments has dragged down earnings projections for its flagship 바카라 resort, raising questions about the speed and strength of its recovery.
Okada Manila remains negative
Fitch noted that it now anticipates lower EBITDAR, elevated adjusted leverage, and weakened debt coverage metrics for the group, all of which could intensify pressure on its already fragile credit profile. These issues are compounded by the company’s high reliance on its integrated resort arm, which contributes more than half of its EBITDA—leaving Universal particularly exposed to single-asset and market-specific risks.
The challenges come at a time when the traditional 바카라 sector is facing increasing competition from online gambling platforms. Data from the Philippine Amusement and Gaming Corporation (PAGCOR) shows that gross gaming revenues (GGR) reached PHP 214.75 billion (€3.76 billion) in the first half of 2025—a 26 percent increase compared to the same period last year.
Licensed 바카라s, including integrated resorts and other land-based venues, accounted for PHP 93.36 billion (approximately €1.63 billion), or 43.47 percent of the total industry’s revenues. However, the land-based segment has shown signs of stagnation amid shifting consumer preferences.
Universal facing own struggles in Japan
Meanwhile, Universal’s amusement equipment business in Japan, though relatively stable, is facing its own structural challenges. Sales of pachinko and pachislot machines plummeted to 92,150 units in 2024, down from 180,632 the previous year, largely due to delays in product certification. The segment is also continuing to be affected by Japan’s aging population and declining interest in traditional gaming formats.
The company’s total revenue for 2024 was JPY 126 billion (€839 million), significantly lower than that of its larger global peers. Financial indicators, such as leverage and coverage ratios, have weakened; however, prudent cost controls and reduced capital expenditures have mitigated some of the negative impact.
Fitch acknowledged that Universal retains short-term financial flexibility, particularly following the successful refinancing of US$800 million in debt that was due to mature in December 2024. The company faces no significant refinancing obligations until August 2029. However, the agency cautioned that any renewed appetite for acquisitions financed through debt or cash reserves could further strain the firm’s balance sheet.
Further downgrade looms?
Looking ahead, Fitch expects modest improvement in the amusement equipment division as new products are introduced more rapidly. Nonetheless, long-term structural risks in both Japan’s domestic gaming market and the Philippine integrated resort space remain central concerns.
Universal Entertainment is being urged to match shareholder returns with business performance while maintaining positive, albeit reduced, levels of free cash flow. Failure to achieve this balance could result in further downward pressure on its ratings.
