Genting cautious on outlook after FY19 net profit of RM2b

Due to the Covid-19, Genting said demand for international travel was expected to decline in the near-term following the imposition of travel restrictions

KUALA LUMPUR: Genting Bhd posted net profit of RM1.99bil in the financial year ended Dec 31,2019, an increase of 46.1% from the RM1.36bil in FY18 but it remained cautious for this year due to the impact of the Covid-19 coronavirus,

It said on Thursday it expected the global economy to modestly improve in 2020 as market sentiments gradually recover following potentially lower global trade tensions.

“However, downside risks are more pronounced due to heightened global concerns over the impact of the Covid-19 on the global economy.

“Additionally, concerns over protracted geopolitical tensions and policy uncertainties remain. In Malaysia, the expansion of the domestic economy is expected to continue at a slower pace, ” it said.

Due to the Covid-19, Genting said demand for international travel was expected to decline in the near-term following the imposition of travel restrictions

“The regional leisure and hospitality industry will be adversely impacted, including the gaming industry.

"Consequently, the Genting Malaysia group is more cautious on the near-term prospects of the leisure and hospitality industry, ” it said..

For FY19, Genting group’s profit before tax for FY2019 rose by 34% to RM4.58bil compared with RM3.42bil in FY18. Its revenue increased by 3.6% to RM21.61bil from RM20.85bil a year ago.

A gain on disposal of a subsidiary and a net gain on disposal of investment properties in UK were recorded by Genting Malaysia Group in FY2019.

“These were partially offset by higher depreciation and amortisation charges recorded in FY2019 due mainly to the Genting Singapore Ltd Group as it has drawn up plans to retire certain assets as it embarks on its S$4.5bil expansion initiatives to transform its world class integrated resort, ” it said.

In FY2019, Resorts World Sentosa's (RWS) business was challenged by geopolitical uncertainties and economic volatilities. Its revenue and Ebitda declined marginally compared with FY2018.

“The higher revenue from RWG was mainly attributable to an improved hold percentage in the mid to premium players segments.

“However, the overall business volume from gaming segment declined in FY2019 due to a reduction in the incentives offered to the players as part of the cost rationalisation initiatives. Increased revenue was also attributable to the non-gaming segment. Ebitda however declined due mainly to higher casino duty as a result of duty rate hike., ” it said.

Genting said the lower revenue recorded by the leisure and hospitality businesses in UK and Egypt was due mainly to lower hold percentage from the premium gaming segment in UK and lower revenue from Cairo, Egypt.

“Ebita however improved due mainly to the impact of adoption of MFRS 16, partially offset by lower debts recovery, ” it said.

Its plantation division recorded an increase in revenue due mainly to higher sales volume from downstream manufacturing.

Genting's revenue from the power division fell mainly due to lower net generation from the Indonesian coal-fired Banten power plant and lower coal prices. Ebitda likewise declined due to lower revenue and impairment loss on receivable from a power plant in India.

Despite higher average oil prices in FY2019, revenue and Ebitda from the oil & gas division were lower due mainly to lower production.

Genting said in the fourth quarter, its net profit fell by 19.2% to RM528.82mil from RM655.16mil a year ago. Its revenue was lower by 2% at RM5.30bil compared with 5.40bil.

Earnings per share were 13.73 sen compared with 17.01 sen a year. It announced a dividend of 15.50 sen, bringing the total for FY19 to 22 sen.

Revenue from Resorts World Sentosa (RWS) declined in 4Q19 due mainly to lower revenue from the gaming segment.

Its non-gaming businesses continued to do well with its hotels achieving an occupancy rate of 92% and key attractions welcoming an average daily visitation of over 20,000.

Overall margins improved as a result of productivity and efficiency initiatives implemented in early 2019 which are now bearing results. Adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) was comparable with 4Q18.

Revenue from Resorts World Genting (RWG) decreased in 4Q19, mainly due to a lower hold percentage in the mid to premium players segments coupled with lower business volume from the mass market. This was mitigated by increased revenue from the non-gaming businesses.

Ebitda declined in 4Q19 due to the lower revenue and higher casino duty as a result of duty rate hike.

The leisure and hospitality businesses in the United Kingdom (UK) and Egypt recorded a marginally lower total revenue in 4Q19. Ebitda was also lower due to the higher level of bad debts, partially mitigated by the impact of the adoption of MFRS 16.

Total revenue from the plantation division increased due mainly to an increase in prices of crude palm oil (CPO) and sales volume of biodiesel and refinery products.

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Genting , Covid-19 , Resorts World , cautious


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