This article first appeared in The Edge Financial Daily on February 28, 2019

KUALA LUMPUR: Genting Bhd’s net profit jumped nearly five times to RM655.16 million in the fourth quarter ended Dec 31, 2018 (4QFY18), from RM132.1 million a year ago, mainly due to lower impairment losses, and as its leisure and hospitality segments did better in the Singapore, US and the Bahamas.

Quarterly revenue grew 2.63% to RM5.4 billion from RM5.26 billion in 4QFY17, according to its stock exchange filing yesterday. Notably, impairment losses for the quarter retreated to RM72.4 million from RM308.8 million a year ago.

Its leisure and hospitality segments in Singapore, the US and Bahamas recorded stronger pre-tax profits. Its power, property, oil and gas, as well as investment businesses and others also similarly improved, though these were partially offset by pre-tax losses in its plantation division that arose due to weaker palm product selling prices.

The group declared a final dividend of six sen per share, to be paid on a date to be fixed, and a special dividend of seven sen per share, payable on April 8. This brings its payout for the financial year ended Dec 31, 2018 (FY18) to 21.5 sen, comparable to FY17’s.

For the full FY18, Genting’s net profit slid 5.48% to RM1.37 billion from RM1.44 billion a year ago, despite revenue rising 4.13% to RM20.85 million from RM20.03 billion, largely as impairment losses rose to RM2.01 billion from RM675 million previously.

This was mainly due to Genting Malaysia Bhd’s investment in notes issued by the Mashpee Wampanoag Tribe, for which it recognised an impairment loss of RM1.83 billion.

“Profit for FY17 had also included a gain of RM302.2 million recognised from the completion of the disposal of Genting Singapore Ltd Group’s 50% interest in its associate, Landing Jeju Development Co Ltd, and a gain on disposal of available-for-sale financial assets of RM226 million,” Genting said.

Genting Malaysia posts first annual net loss since 2000

Separately, Genting Malaysia reported that the RM1.83 billion impairment loss from its investment in the Mashpee Wampanoag Tribe also caused it to close its financial year ended Dec 31 (FY18) in the red — its first loss-making year since 2000.

Genting Malaysia posted a net loss of RM19.59 million in FY18, as opposed to a net profit of RM1.16 billion a year ago, though revenue rose 6.4% to RM9.93 billion from RM9.33 billion.

This is despite a 60.11% net profit jump in Genting Malaysia’s 4Q net profit to RM720.14 million from RM449.79 million a year ago, on the back of lower effective tax rate following the reversal of additional tax expense of RM166.2 million incurred in the previous quarter.

“This reversal is following the High Court of Kuala Lumpur’s decision to grant the company’s application for leave to commence judicial review of the ministry of finance’s (MoF) decision to amend terms of tax incentives previously granted to the Company, and a stay of the MoF decision pending disposal of the judicial review application before the High Court,” Genting Malaysia said in a stock exchange filing.

Its quarterly revenue, however, slipped 1.47% to RM2.51 billion from RM2.54 billion a year ago.

It proposed a 13 sen dividend, comprising a special dividend of eight sen per share to be paid on April 4, and a final dividend of five sen per share to be paid on a date to be fixed. This brings its cumulative payout for FY18 to 19 sen, versus 17 sen for FY17.

On its outlook, Genting Malaysia cautioned that the operating environment in Malaysia will be challenging as the group adapts to the new fiscal operating landscape in 2019, following the severity of the casino duty increases announced in Budget 2019.

It also said it will complete the roll-out of the Skytropolis Funland indoor theme park and Imaginatrix. While it is reviewing the development plans and options for the outdoor theme park amid ongoing legal proceedings, it said it remains committed to the theme park as a growth initiative in Malaysia.