Genting Bhd’s earnings surge, growth seen at all operating divisions

Bird's eye view of Resort World Genting.

KUALA LUMPUR: Genting Bhd’s earnings climbed 57% year-on-year to RM456.33mil in the second quarter (Q2) ended June 30 despite the group incurring impairment losses of RM113.42mil.

The solid performance was thanks to a 17% improvement in total revenue to RM4.95bil as well as a net gain on disposal of available-for-sale financial assets of RM139.1mil.

Leisure and hospitality business - the single largest contributor to revenue and profit - registered a 45% jump in pre-tax profit to RM1.63bil.

The division's Malaysian component, comprising Resorts World Genting (RWG), posted a 7% increase in revenue to RM1.44bil on higher volume of business from the mass market as well as mid to premium segments of the business.

Genting said the opening of new attractions in SkyPlaza (a shopping mall plus casino) in March - part of the RM10.4bil Genting Integrated Tourism Plan (GITP) - contributed to higher volume of business from the mass market.

However, pre-tax profit slid 5% due mainly to higher costs relating to the premium players business as well as higher operating costs incurred for the new facilities opened under GITP.

Meanwhile, RWG's Singapore counterpart saw a 31% jump in revenue to RM1.85bil and a whopping 148% growth in pre-tax profit to RM918.5mil.

The increased revenue for Resorts World Sentosa (RWS) was due to higher rolling win percentage in the premium player business.

As for the healthy growth in earnings, it said this came on the back of improved operating margin as RWS continued with its strategy of focusing on better margin business and maintaining lower impairment of receivables.

Genting's plantation businesses in Malaysia and Singapore both enjoyed higher revenue and profit. The combined operations grew 48% in revenue to RM423.1mil and 97% in pre-tax profit to RM144.6mil.

Stronger palm products selling prices and higher fresh fruit bunches production were factors that helped to boost the revenue and profit of the plantation division.

The Genting group's power, property and oil & gas divisions all saw improvements in both revenue and profit.

Revenue and earnings growth of the power division was mainly from the sale of electricity by the Indonesian Banten coal-fired power plant following the start of commercial operations in March.

On its plans, Genting said the development of the new GITP facilities at Resorts World Genting remained its key focus in Malaysia.

RWS in Singapore, meanwhile is preparing a five-year strategic roadmap that will enhance its destination appeal in the targeted market segments as well as adopting innovative technology to drive productivity, efficiency and customer experience.

Genting noted that its 52.8%-owned subsidiary Genting Singapore was closely following the progress of the Japan IR Execution Bill, which would pave the way for the formal bidding process of the Japan gaming licences.

Genting Bhd directors have declared an interim dividend of 8.5 sen per ordinary share in respect of this financial year ending Dec 31, 2017. 

For the whole of the previous financial year, Genting only announced a dividend (final) of 6.0 sen and a special dividend of 6.5 sen when reporting its final-quarter results.

Meanwhile, Genting Malaysia Bhd’s Q2 earnings tumbled 59% to RM193.42mil mainly due to foreign exchange losses and the lower performance of its UK operations.

The group incurred forex losses on its US dollar-denominated assets as a result of the strengthening of the ringgit against the greenback.

This was reflected by an adjusted loss before interest, tax, depreciation and amortisation (LBITDA) of RM47.9mil from the “investments and others” segment, versus an adjusted earnings before interest, tax, depreciation and amortisation (EBITDA)_of RM40.3mil in the same quarter last year. 

There was also a RM57.1mil drop in adjusted EBITDA from the UK casino business, mainly due to lower revenue; as well as a RM37.8mil fall in adjusted EBITDA from the leisure and hospitality business in Malaysia, mainly due to higher cost relating to the premium players business and higher operating costs incurred for the new facilities under GITP.

Genting Malaysia’s Q2 revenue was, however, higher by 3% compared with the same quarter in 2016.