This article first appeared in The Edge Financial Daily on August 30, 2018

KUALA LUMPUR: Genting Bhd’s net profit for the second quarter of its financial year ending Dec 31, 2018 (2QFY18) slipped 16% year-on-year (y-o-y) to RM383.52 million from RM454.14 million, dragged down by reduced earnings at its overseas leisure and hospitality businesses, as well as lower plantation and power contributions.

In a stock exchange filing, it said its Resorts World Sentosa (RWS) in Singapore was impacted by unfavourable luck factor, while earnings for its leisure and hospitality business in the UK and Egypt fell due to higher debt written off. Its US operations and Bahamas’ earnings were also affected by the weaker US dollar to ringgit exchange rate.

Meanwhile, performance at its Malaysian plantations were impacted by softer palm products selling prices and lower fresh fruit bunches production. In its power business, its Banten power plant in Indonesia recorded lower earnings due to unfavourable exchange rate.

Revenue for 2QFY18 slipped 3% y-o-y to RM4.82 billion from RM4.95 billion. The group declared a dividend of 8.5 sen per share, to be paid on Oct 12.

For the first half of its financial year (1HFY18), Genting reported a 12% y-o-y decline in net profit to RM986.22 million from RM1.12 billion, despite revenue growing 4% y-o-y to RM10.07 billion from RM9.72 billion on higher contributions from Resorts World Genting (RWG) in Malaysia, its leisure and hospitality business in UK and Egypt, and its oil and gas division. The weaker cumulative net profit was mainly due to a net fair value loss of RM206.1 million on its financial assets at fair value through profit or loss.

Genting Malaysia sees 2Q net profit more than double

Separately, its 49.4%-owned listed subsidiary Genting Malaysia Bhd, which houses its RWG business, reported a more than doubling in second quarter net profit y-o-y to RM395.71 million from RM193.82 million, and declared an interim dividend of six sen per share to be paid on Oct 10. Revenue grew 6% y-o-y to RM2.42 billion from RM2.29 billion.

The group attributed the stronger quarterly earnings to improved hold percentage in the mid- to premium-players segment, and positive reception from the new facilities and attractions under the Genting Integrated Tourism Plan (GITP). Visitations to RWG grew 8% in the quarter, while its hotels recorded occupancy rates of 97%.

The group also recorded a forex gain on its US dollar-denominated assets of RM29.7 million, as compared to a forex translation loss of RM42.7 million in 2QFY17.

In 1HFY18, Genting Malaysia’s net profit jumped 46% y-o-y to RM753.94 million from RM517.74 million, thanks to overall higher volume of business recorded at RWG. Revenue grew 7% y-o-y to RM4.82 billion from RM4.52 billion.

On prospects for its gaming and hospitality business, Genting said the group remains focused on the development of its GITP at RWG. The group is also gearing up to bid for an expansion opportunity in Japan.

Genting shares rose three sen to RM8.70 yesterday, valuing the group at RM33.39 billion, while Genting Malaysia shares slipped two sen to RM5.16 for a market capitalisation of RM29.2 billion.