Genting 1Q profit falls despite higher revenue base

by MARK RAO

Genting Bhd’s net profit contracted 6.8% year-on-year (YoY) to RM561.64 million for the first quarter ended March 31 this year (1Q19) on terminated contracts for its flagship resort in Genting Highlands.

The company recognised RM198.3 million in provisions for its associate Genting Malaysia Bhd due to the cancellation of contracts for Resorts World Genting’s outdoor theme park.

This was partially offset by gains noted by Genting Malaysia from the disposal of its UK-based casino operator, Coastbright Ltd.

Group revenue grew 6.1% YoY to RM5.57 billion on higher contribution from Resorts World Genting, non-gaming revenue and plantation income.

Higher revenue from the Genting Highlands-based resort was driven by the high hold percentage in the mid to premium player segments as overall gaming volume was down on cost rationalisation efforts.

Non-gaming revenue came in stronger due to higher spend per visitor, while revenue from the casino businesses in the UK and Egypt was marginally higher on the adoption of Malaysian Financial Reporting Standards 16.

The leisure and hospitality businesses in the US and Bahamas turned in higher revenue due to the stronger US dollar against ringgit exchange.

The leisure and hospitality business, which includes both gaming and non-gaming revenue, is Genting’s largest revenue contributor at 83.1% or RM4.63 billion in 1Q19.

Its plantation business brought in a higher turnover of RM601 million on higher sales volume. Earnings from the segment were lower due to weaker palm product selling prices.

Revenue and earnings from the group’s power and oil and gas divisions were also lower for the quarter.

For Malaysia, Genting will continue to rationalise operating costs to mitigate the impact of higher casino duties, which came amid an increasingly challenging operating environment, while also leveraging on new assets to grow the business, its exchange filing yesterday noted.

The gaming and leisure group intends to invest some SG$4.5 billion in Resorts World Sentosa for expansion and upgrades to offset the decline in earnings and revenue noted by the Singapore-based resort.