Forex lift for Genting
Gains from overseas operations coupled with disposal of a stake boost earnings of casino operator
PETALING JAYA: Genting Bhd registered a set of strong numbers in the first quarter, thanks to its operations from outside Malaysia that helped the group to enjoy significant gains from the weak ringgit.
The gaming company, which started as an operator of a resort and a single casino in Genting Highlands in the early 1970s, also enjoyed a lift in its earnings from the disposal of a stake in an associate company in Singapore.
During the quarter ended March 31, 2017, Genting, which has operations in Singapore, UK and the US apart from Malaysia, registered a 360% rise in net profit to RM603.06mil compared with RM130.83mil in the corresponding period last year.
The group’s profit before tax was RM1.46bil, a significant increase compared with RM542.7mil last year. This was on a revenue of RM4.77bil in the first quarter compared with RM4.7bil in the corresponding quarter last year.
“The increase was due mainly to higher earnings before interest, tax, depreciation and amortisation (EBITDA) and a gain of RM302.2mil recognised from the completion of the disposal of a 50% stake by Genting Singapore Plc (GENS) of its interest in an associate company,” the company said yesterday.
GENS disposed of its 50% stake in its associate company Landing Jeju Development Co Ltd.
Genting benefited from the improved operations and stronger Singapore and US currencies while the profit contribution from its Malaysian leisure and hospitality operations was marginally lower. The UK operations also saw a decline of 21% in its profit contribution due to the weak sterling pound against the ringgit.
Resorts World Sentosa (RWS), which is the anchor of Genting’s Singapore leisure and gaming operations, recorded higher revenue in the quarter due mainly to the stronger Singapore dollar compared to the ringgit.
But revenue in Singapore dollar terms showed a decline of 4% compared with the same period last year, Genting said.
However, EBITDA increased primarily due to substantially lower impairment of trade receivables in the first quarter and improvement in operating margins due to cost efficiency initiatives.
Genting’s operation in the US is another segment of its business that enjoyed higher revenue and EBITDA and contributed positively to its bottom line.
The company said the improved performance was due mainly to higher revenue from Resorts World Casino New York City (RWNYC) operations enhanced commission structure with the New York state authority as well as a stronger US dollar to the ringgit.
Resorts World Genting (RWG), which is the operations in Malaysia, registered higher revenue even though business volumes were lower.
“However, EBITDA decreased due mainly to higher costs relating to the premium players business and costs incurred for the new facilities,” the company said.
Genting Malaysia Bhd (GENM), a subsidiary of Genting, is building new facilities under a project called Genting Integrated Tourism Plan (GITP) to complement its existing attractions. When completed, it is expected to elevate RWG’s position as the destination of choice in the region.
On RWS, Genting said its efforts in the gaming and non-gaming segments have shown encouraging response from its targeted market segments and RWS is optimistic in delivering sustainable earnings growth.
GENS was also allocating resources in tandem with the progress of the Japan IR Execution Bill, which will pave the way for the formal bidding process of a gaming licence in Japan. Going to Japan is one of GENS’ diversification plans.
In the UK, which is under GENM, the group would focus on its non-premium players business where it continues to grow its market share.
“The strategy to reduce short-term volatility in its premium players business continues to prove successful in developing a more sustainable business,” Genting said.
It also said GENM has seen an encouraging improvement in performance at Resorts World Birmingham and has recently announced plans to introduce new attractions such as virtual reality games, which will be new to the UK.