Casino operator Genting Singapore saw profit plunge 73% in Q1 as VIP bad debt losses mounted.
Revenue in the three months ending March 31 fell 23% to S$639.2m (US $484m), while operating profit fell 59% to S$130m and net profit fell 64% to S$91.7m. The profit share belonging to Genting Singapore’s ordinary shareholders was down 73% to S$62.7m. The news pushed the company’s shares down 7.9%, the biggest single drop since Genting’s Resorts World Sentosa property opened in 2010.
Gaming revenue was off 26% to S$494.8m while non-gaming revenue was off 8% to S$144m. Genting said its VIP gaming business “continues to come under stress due to regional environmental factors” and the company doesn’t expect “any respite in the medium term.” The company is “restructuring our operational and marketing organization to adjust to this change” but warned that “the year ahead will be challenging.”
Bad debt writeoffs in Q1 rose 30% to S$76.3m. Genting Singapore had previously warned that its VIP markers were becoming increasingly difficult to collect, which led the company to tighten its lending policies.
On the plus side, Genting expects its non-gaming business will deliver “a commendable performance in 2015.” The quarter also saw the company break ground on its Resorts World Jeju integrated resort joint venture in South Korea, which is expected to open in late 2017.
SINGAPORE SAYS TWO CASINOS IS PLENTY
At least Resorts World Sentosa won’t have to worry about competition beyond its crosstown rival Marina Bay Sands. On Monday, Senior Minister of State for Trade and Industry Lee Yi Shyan told Singapore’s parliament that the government currently has “no plans” to open up the city-state’s casino market when the two integrated resorts’ licenses expire in 2017.
Singapore’s two casinos are among the world’s most profitable gaming venues. Lee told parliament that the duopoly accounted for between 1.5% and 2% of Singapore’s gross domestic product and created over 20k jobs. Lee said the government’s focus would be on working with its two existing licensees to ensure they’re doing everything they can to enhance Singapore’s appeal to tourists.