Genting Malaysia swings to loss in FY18, declares special dividend

Genting Malaysia reported increased revenue but also a net loss of RM19.59 million— Reuters pic
Genting Malaysia reported increased revenue but also a net loss of RM19.59 million— Reuters pic

KUALA LUMPUR, Feb 27 —  Casino  and hospitality giant Genting Malaysia Bhd slipped into a net loss of RM19.59 million for the 2018 financial year compared with a net profit of RM1.16 billion in the preceding year, primarily attributed an impairment loss of RM1.83 billion.

Revenue increased to RM9.93 billion from RM9.33 billion previously, it said.

However, the fourth quarter net profit improved by 60 per cent year-on-year to RM720.14 million, although revenue was slightly lower at RM2.51 billion versus RM2.54 billion before.

The board has declared a special single-tier dividend of 8.0 sen per share and proposed a final single-tier dividend of 5.0 sen per share.

If approved, total dividend for the year would amount to 19.0 sen per ordinary share, including an interim single-tier dividend of 6.0 sen per share. This represents a 12 per cent increase from the previous year.

Elaborating on its 2018 financial results, Genting Malaysia said in a statement that the Malaysian leisure and hospitality business recorded a 13 per cent increase in revenue to RM6.59 billion and a 27 per cent jump in adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) to RM2.29 billion.

This was mainly contributed by higher hold percentage in the mid to premium segment of the business.

Additionally, Resorts World Genting (RWG) recorded growth in business volume from the mass market segment following the roll-out of new facilities and attractions under the Genting Integrated Tourism Plan which included Empire by Zouk, Zouk Club, the VOID, and the Skytropolis Funland indoor theme park, it said.

In the UK and Egypt, the group’s operations registered a decrease in revenue and adjusted EBITDA to RM1.78 billion and RM182.4 million respectively, largely due to lower volume of business from the premium gaming segment.

Nevertheless, the decline was mitigated by higher contributions from Crockfords Cairo and the group’s interactive business, Genting Malaysia said.

The impact to adjusted EBITDA was also alleviated by lower debts written off during the period.

Meanwhile, the group’s operations in the US and Bahamas recorded a four per cent decline in revenue to RM1.38 billion, mainly due to the unfavourable foreign exchange translation of the US dollar against the ringgit.

“Excluding this impact, revenue increased by three per cent primarily attributable to higher contribution from the Hilton Miami Downtown hotel. Adjusted EBITDA also improved by 32 per cent to RM305.8 million, predominantly driven by lower operating costs as a result of ongoing improvements to operational efficiencies at Resorts World Bimini,” it said.

The group’s overall adjusted EBITDA was aided by higher foreign exchange translation gains on its US dollar-denominated assets of RM23.0 million recorded in the 2018 financial year, compared with the foreign exchange translation losses of RM112.7 million reported in the previous last year.

As for the outlook, Genting Malaysia said the group remained cautiously optimistic on the opportunities and growth potential of the leisure and hospitality industry.

In Malaysia, the operating environment will be challenging as the group adapts to the new fiscal operating landscape.

“In view of the severity of the casino duty increases announced in the Malaysian Budget 2019, the group will continue reviewing and managing its cost structure. This includes reducing or delaying capital expenditures and the implementation of various cost rationalisation initiatives such as manpower optimisation.

“The group will also continue placing emphasis on the execution of its marketing strategies as well as growing key business segments through yield management systems and database analytics,” it said.

The Genting Malaysia group will complete the roll-out of the Skytropolis Funland indoor theme park and Imaginatrix, an attraction which combines physical rides with state-of-the-art virtual reality gaming technology.

“(However,) the development plans and options for the outdoor theme park are being reviewed amid ongoing legal proceedings. The group remains committed to the outdoor theme park at RWG as a growth initiative in Malaysia,” it explained.

In the UK, the group remains focused on delivering sustainable performance amid the challenging operating environment by managing business volatility in the premium players segment.

It will also place emphasis on strengthening its position in the non-premium players segment by growing market share and improving overall business efficiency.

Meanwhile, the Genting group would continue its efforts in driving business volumes and enhancing the operating performance of Resorts World Birmingham, it said.

The group is also committed to improving the product mix and targeted marketing of its interactive business to grow and reinforce its position in this business segment. In the US, Resorts World Casino New York City (RWNYC) maintained its position as the leading gaming operator in the northeast US region despite increased competition.

Nevertheless, the group will continue intensifying direct marketing efforts to grow visitation and drive frequency of play at the property.

“Meanwhile, the group remains focused on the ongoing expansion works at RWNYC which is expected to open in phases from the end of 2019. In Miami, the group will continue to leverage the Hilton Miami Downtown hotel to boost visitation and higher spend at the property,” Genting Malaysia said.

In the Bahamas, the group was committed to improving operational efficiency and infrastructure at Resorts World Bimini to grow visitation and revenue at the resort, it added. — Bernama

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