KUALA LUMPUR: Genting Bhd has announced a 6.8% drop in its first-quarter (1Q) 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 previously.
The group 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 were partially offset by the gain on disposal of Coastbright, which is an indirect wholly-owned subsidiary of Genting Malaysia Bhd, the group said in a filing.
It said Resorts World Sentosa registered lower earnings but non-gaming revenue business registered growth with higher spend per visitor, while hotel occupancy remained high at 93%.
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 — was offset by higher casino duty.
In the UK and Egypt, Genting said casino businesses recorded improved earnings mainly due to higher revenue and the impact of adoption of MFRS 16 was partially offset by lower debts recovery in the quarter.
Higher earnings from the leisure and hospitality businesses in the US and the Bahamas, meanwhile, were due mainly to the stronger US dollar exchange rate to the ringgit.
Genting Malaysia sees 25% fall in net profit
Separately, Genting Malaysia reported a 25% fall in 1Q net profit to RM268.29 million or 4.75 sen per share, compared with RM358.24 million or 6.33 sen per share in the corresponding quarter a year ago.
This was despite quarterly revenue rising 14% to RM2.74 billion, from RM2.4 billion previously, supported mainly by higher contributions from its leisure and hospitality businesses in Malaysia, although overall gaming business volume declined due to the reduction in incentives offered to players as part of its cost rationalisation initiatives.
Genting Malaysia said it 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.
“Additionally, the group will focus on leveraging the new assets to grow key business segments. To this end, the group will place emphasis on intensifying database marketing efforts to optimise yield management, as well as improving service delivery and operational efficiencies at Resorts World Genting to enhance overall guest experience.
“In the UK, the group remains committed to streamlining its operations and improving overall operational efficiency to strengthen its position in the country,” said Genting Malaysia, adding that operations at Resorts World New York City are expected to deliver steady growth despite a crowded market.
Meanwhile, Genting Plantations Bhd’s net profit for 1Q fell 58.72% to RM41.68 million, from RM100.98 million in the same period last year, dragged down by lower palm product selling prices. Earnings per share stood at 5.16 sen, versus 12.57 sen last year.
Quarterly revenue, however, was up 17.51% to RM621.7 million, compared with RM529.07 million preciously.
The group said the average selling price for crude palm oil was 17% lower compared with the RM1,974 per tonne registered in the year-ago 1Q, while the average selling price for palm kernel was down 38% to RM1,283.
“Palm products’ selling prices remain pressured by the persistently high inventory levels, protracted US-China trade discord and concerns on demand from major importing countries,” said Genting Plantations.
This was despite the group’s higher fresh fruit bunch production, which grew 14% year-on-year, supported by the growth from its Indonesia operations on the back of an increase in mature areas and better age profile coupled with a stronger yield from Malaysia operations due to a change in cropping pattern.