Genting M’sia earnings soars on UK business turnaround

Genting Casino Chinatown in London. Genting UK is one of the largest casino operators in the UK.

KUALA LUMPUR: Genting Malaysia Bhd more than doubled its second-quarter (Q2) earnings to RM476.44mil from a year earlier, mainly due to a turnaround in its UK casino business.

The casino business in the UK recorded an adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) of RM92.8mil versus an adjusted loss before interest, tax, depreciation and amortisation of RM99.9mil last year, thanks to significantly higher revenue aided by some debt recovery, it told Bursa Malaysia on Thursday.

The UK revenue soared 70.7% to RM504.2mil, mainly contributed by the premium players business as a result of “revised marketing strategies adopted.”.

Genting’s Malaysian and US operations in leisure and hospitality also improved their adjusted Ebitda, thus contributing as well to the 106.3% jump in Q2 earnings on 12.7% higher revenue of RM2.23bil.

The adjusted Ebitda for the Malaysian operations jumped 12.2% to RM472.1mil while the figure for US/Bahamas grew 36.3% to RM51.8mil (besides the higher volume of business, favourable foreign exchange movement of the US dollar against the ringgit also contributed to the US operations’ bottom line.)

Genting Malaysia said the group’s earnings were also boosted by higher interest income by RM37.8mil, mainly from foreign currency denominated investment.

The board has declared an interim dividend of 3 sen per share (RM2.80 previously).

Also reporting its Q2 results on Thursday was Genting Bhd, the holding company of the Genting group. Genting Bhd owns 49.3% equity interest in Genting Malaysia Bhd and a stake in Resorts World Sentosa in Singapore, as well as plantation, power and oil & gas businesses.

It announced a 334% growth in bottom line for Q2 to RM294.73mil although earnings from the group’s two largest profit contributors -- leisure & hospitality and plantations -- were down.

Adjusted Ebitda from the diversified operations fell 4.1% to RM1.22bil.

What helped the group's net profit to jump by 139.5% to RM613.6mil, and consequently earnings to grow by a whopping 334%, were lower net fair value loss on derivative financial instruments (a RM231.2mil improvement), higher interest income (up RM122.2mil) and no impairment loss (compared with loss of RM109.9mil a year earlier). 

Genting Bhd said earnings from the group’s leisure and hospitality businesses slipped by 13.3% due to the Singapore operations’ profit being halved (-54.6%) to RM370.0mil.

Both its plantation businesses in Malaysia and Singapore earned 17% less compared with the same quarter last year (the Indonesian operations fell into the red) despite recording higher revenue due to stronger palm product selling prices.

“The lagged effects of adverse weather conditions experienced in previous years had impacted on FFB (fresh fruit bunches) production,” it said, adding that the lower yields and higher manuring costs collectively outweighed the impact of higher selling prices.

No interim dividend has been proposed for the six months ended June 30, 2016.