KUALA LUMPUR (May 23): Genting Bhd announced a 6.8% drop in its first quarter net profit to RM561.64 million or 14.59 sen per share from RM602.7 million or 15.74 sen per share a year earlier.
Revenue for the quarter ended March 31, 2019 grew 6.1% to RM5.57 billion from RM5.25 billion in 1QFY18.
Genting attributed the weaker profitability to the provision for the termination of contracts related to its outdoor theme park at Resorts World Genting (RWG) amounting to RM198.3 million, as well as a loss on a discontinued cash flow hedge.
These have been partially offset by the gain on disposal of Coastbright, which is an indirect wholly-owned subsidiary of Genting Malaysia Bhd (GenM), the group said in a filing today.
It said Resorts World Sentosa (RWS) registered lower earnings but non-gaming revenue business registered growth with higher spend per visitor, while hotel occupancy remained high at 93%.
RWG saw higher revenue due to an exceptionally high hold percentage in the mid to premium players segments, but overall gaming business volume fell due to the reduction in incentives offered to the players as part of the cost rationalisation initiatives.
The increase in adjusted earnings — resulting from higher revenue and lower payroll and related expenses as a result of a reduction in the number of employees — were offset by higher casino duty.
In the UK and Egypt, Genting said casino businesses recorded improved earnings mainly to higher revenue and the impact of adoption of MFRS 16, partially offset by lower debts recovery in the quarter.
Higher earnings from the leisure and hospitality businesses in the US and Bahamas, meanwhile, were due mainly to the stronger US dollar exchange rate to the ringgit.
Even though there was better sales due to higher offtake of biodiesel and refined palm products from its downstream manufacturing, Genting said earnings at its plantation division was impacted by weaker palm product selling prices.
Earnings from the power division decreased compared with last year, due to lower generation from the Indonesian Banten coal-fired power plant, as a consequence of the higher number of outage days; while the oil & gas division generated less earnings due mainly to lower average oil prices.
Moving forward, Genting said the group will continue to review its capital expenditure requirements and rationalise its operating cost structure to mitigate the impact of the hike in casino duties against an increasingly challenging operating environment in Malaysia.
For RWS, Genting said it will innovate its offerings and re-engineer its marketing efforts to broaden reach, and deepen commitment in key target markets.
In Japan, the Genting Singapore Ltd (GenS) group is stepping up its efforts and deploying more resources to be seriously engaged in the anticipated competitive bid process.
“Backed by the solid track record of operating in a highly respected jurisdiction and reinforced by a robust balance sheet, GenS Group is well positioned to deliver a compelling bid that will showcase a large-scale integrated resort destination which will enhance Japan’s tourism appeal and make significant contributions to its tourism economy.
Further operational streamlining efforts will be taking place in the UK while in the US, Resorts World Casino New York City will continue to deliver steady growth.
“Construction of Resorts World Las Vegas (RWLV) is progressing well. As of May 9, RWLV has completed concrete work up to level 65 of the West Tower and level 64 of the East Tower. The hotel towers are scheduled to reach their full height (level 69) on July 23.
“Total development and land costs incurred as of 31 March 2019 were approximately US$1.3 billion,” said Genting, adding that the first phase is estimated to cost approximately US$4.1 billion and is targeted to open by end-2020.
Shares in Genting fell five sen or 0.78% to finish at RM6.33 today, bringing a market capitalisation of RM24.37 billion.