GGRAsia – Genting Malaysia 4Q profit down 23 pct

Genting Malaysia 4Q profit down 23 pct

Feb 27, 2015 Newsdesk Latest News, Rest of Asia, Top of the deck, World

Genting Malaysia Bhd, an operator of casino properties in Malaysia, the United States, the Bahamas and the United Kingdom, saw its fourth quarter profit attributable to shareholders of the company fall 22.6 percent year-on-year to MYR309.8 million (US$85.8 million).

After-tax profit for the period declined by 25 percent year-on-year to MYR293.8 million, the firm said on Thursday. It added that the quarterly post-tax profit decline would have been much smaller – at 9 percent – but for an over-provision on deferred tax relating to the prior year.

Basic and diluted earnings per share for the quarter fell 23 percent year-on-year to MYR0.0546.

Profit attributable to shareholders for the full year was MYR1.19 billion, a decline of 25.8 percent year-on-year. Basic and diluted earnings per share for the full year fell 26 percent to MYR0.2096.

The group’s pre-tax profit for the fourth quarter decreased by 16 percent to MYR368.4 million, “arising from the write-off of MYR55.5 million project costs in relation to the unsuccessful application of licences in New York State as well as higher assets write-off by MYR27.3 million.” The first reference was to Genting Malaysia’s unsuccessful proposal for two new casino properties in upstate New York, and the second to business connected to its sole Malaysian casino resort, Resorts World Genting (pictured).

The company added that trade at its flagship Resorts World Genting property – which has been run by the Genting group’s controlling family, the Lims, since the 1960s – had been adversely affected by factors including low hold rates in the VIP gambling segment, lower play volume and higher staff costs, the latter also impacting margins.

In Malaysia, the adjusted EBITDA margin (on earnings before interest, taxation, depreciation and amortisation) was lower at 35 percent compared to 38 percent last year, said the operator.

The Malaysian operation saw a 6 percent decline in revenue for full-year 2014, to approximately MYR5.36 billion during the period.

Revenue in U.K. operations in the fourth quarter was adversely affected “mainly due to a lower hold percentage in its international markets division, which cater to the premium players business at four of its London casinos,” said Genting Malaysia. Revenue from the firm’s U.K. operations decreased by 17 percent year-on-year in the fourth quarter, to MYR342.1 million

Brighter U.S.

But in the U.S., where Genting Malaysia operates Resorts World Casino New York City, there was a 12 percent increase year-on-year in revenue to MYR264.4 million.

The Bahamas operation, known as Resorts World Bimini, is also included for accounting purposes in the U.S. numbers, the firm stated.

Genting Malaysia stated earlier this month it had concluded a deal to acquire more land for further extension to its Bahamas property.

The U.S. market improvement was mainly due to “higher volume of business from the operations at Resorts World Casino New York City as well as Bimini,” the company said in a filing on Thursday to Bursa Malaysia, the country’s stock exchange.

Genting Malaysia group-wide reported a 3 percent decline in total revenue to approximately MYR2.06 billion in the fourth quarter compared to MYR2.12 billion in the prior-year period.

Revenue from the Malaysian leisure and hospitality business declined by 2 percent to approximately MYR1.42 billion in the fourth quarter, “primarily due to a lower hold percentage in the premium players business despite an overall higher volume of business”, it stated, adding that redevelopment works at Resorts World Genting had also had a negative effect on overall visitor numbers.

But it added: “Resorts World Genting’s core business continues to remain resilient”.

Approximately one third of the 1,300 rooms under Resorts World Genting’s First World Hotel Tower 2A development were opened at the end of 2014. The remaining rooms are due to be available by mid 2015, the company stated, with further phases of site improvements opening in 2016.

“The region’s gaming markets continue to experience a slowdown, as evidenced by the numbers reported by the Singapore and Macau gaming operators. However, the outlook for international tourism is likely to remain largely positive with the expected increase in demand for air travel,” said Genting Malaysia’s management in commentary on the result and referring to Asian operations.

Resorts World Birmingham – described by the company as the first integrated casino resort in the U.K. – is “on track to open in the second half of 2015,” said the firm.