Genting’s cost control to mitigate virus impact

This comes on overall business volume declining in Q1

PETALING JAYA: Amid the challenges posed by the Covid-19 pandemic, Genting Bhd posted a lower revenue of Rm4.1bil for the first quarter (Q1) ended March 31, 2020, compared with Rm5.6bil in the previous corresponding quarter.

In a statement, the diversified conglomerate noted that the revenue and adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) of Resorts World Sentosa decreased 37% and 53%, respectively, in Q1.

“The severity of the impact was partially mitigated by a series of cost-control measures, including instituting a pay-reduction scheme for all managerial team members, encouraging all employees to take their annual leave,” Genting said.

It pointed out that the respective resort operations of the Genting Malaysia Bhd (Genm) group were temporarily closed from mid-march 2020 as per the respective government’s directives arising from the Covid-19 outbreak.

“Decreased revenue from Resorts World Genting was mainly due to a decline in the overall business volume from both the gaming and non-gaming segments, following the unprecedented disruptions to the business activities as a result of the Covid-19 outbreak,” Genting said.

“In addition, an exceptionally high hold percentage had been recorded in the mid to premium players segments in Q1 of financial year 2019 (FY19). Consequently, Ebitda decreased in Q1 of FY20 mainly due to the lower revenue, partially mitigated by lower costs relating to the premium players business,” it explained.

Similarly, the group’s revenue from the leisure and hospitality businesses in the United Kingdom, Egypt and the United States was also impacted, as these economies went into lockdown because of the Covid-19 outbreak.

For the quarter in review, the Genting group suffered a net loss of Rm132.3mil, compared with a net profit of Rm561.6mil previously.

It attributed the result to lower Ebitda; impairment losses of Rm482.5mil arising mainly from Genm’s investment in certain assets; as well as a share of loss from joint ventures and associates such as Empire Resorts Inc, compared with a share of profit in Q1 of FY19.

In a separate filing, Genm announced that its total revenue for Q1 of FY20 had declined by 29% to Rm1.9bil, while Ebitda had fallen 48% to Rm355.4mil.

“This was primarily due to the temporary disruptions to the group’s resort operations worldwide caused by the Covid-19 outbreak, which severely impacted business volumes.”

Genm posted a net loss of Rm417.9mil for Q1 of FY20, compared with a profit of Rm268.3mil in Q1 of FY19.

“While the full extent of the impact of Covid-19 on the group’s financial performance and operations for FY20 ending Dec 31 is uncertain at this point in time, the board wishes to caution that the group expects its financial results for the remaining period in 2020 to be adversely impacted,” Genm said.

In the meantime, Genm said the group would continue to implement various aggressive cost-control measures across all its operating entities, including a reduction in operational expenditure such as payroll and related costs and the cancellation or deferment of non-essential capital expenditure.

During the period in review, Genm said its Malaysian leisure and hospitality business reported lower revenue and adjusted Ebitda by 36% and 40% to Rm1.2bil and Rm331.2mil, respectively.

“The decline was mainly attributable to a decrease in overall volume of business in the group’s gaming and non-gaming segments following the unprecedented disruptions to the group’s operations amid the Covid-19 outbreak,” Genm said.

Its overseas operations such as those in the UK and US were similarly affected by the Covid-19 outbreak.

During the period in review, Genm recognised its share of Empire’s loss of Rm100.1mil.

This was primarily due to costs associated with the refinancing of Empire’s debts, as well as depreciation and amortisation, it explained.

Genting’s shares closed one sen higher at RM4.08 yesterday, while Genm’s shares were unchanged at RM2.36.

“While the full extent of the impact of Covid-19 is uncertain at this point of time, the board wishes to caution that it expects FY20’S results to be impacted.” Genting Malaysia Bhd