The losing streak of casino operator Genting Singapore continues in the first quarter of 2016 as its net profit for the first three months swung to 83 percent net loss on a large foreign exchange loss, higher bad debt provisions, finance and other costs.
Singapore Business reported the earnings of Genting, which operates the Resorts World Sentosa (RWS) integrated resort, slumped to S$10.8 million (US$7.89 million) compared to a year ago, when it had turned in a net profit of S$62.7 million (US$45.6 million). This is the fourth consecutive quarter that the company’s income fell since second quarter of last year.
Turnover fell 5 per cent year on year to S$608.01 million (US$ 443.80 million), dragged down by a 9 per cent slide in gaming revenue to S$450.54 million (US$328.80 million).
Adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) of Genting came in at S$192.5 million (US$ 140.5 million) in the first quarter, down by 16 percent from the prior-year period.
The gaming resort firm also blamed the increase in impairment losses on trade receivables – including bad credit extended to VIP players – for the dismal revenue it had for the first quarter. The firm reported an impairment loss of S$D92.4 million (US$ 67.42 million) in the quarter, up by 21 percent from a year earlier.
In a statement, Genting said that it is now exercising caution with its VIP gaming business by slashing credit period from 90 to 30 days.
“In this connection, we have been prudent in providing for our gaming receivables,” Genting added.
The gaming resort firm, meanwhile, is banking on its mass gaming market segment, which started this year “on a better note with strong electronic gaming machines’ performance.”
“We have seen encouraging progress with the implementation of our new marketing strategies to grow the foreign premium mass market,” it added.
Like Genting, Philippines’ Travellers International Hotel Group Inc. (TIHGI)—owner and operator of Resorts World Manila—saw a 31-percent decline in first quarter net profit to P1.2 billion (US$ 25.80 million).
A lower “win” rate has plunged TGHI’s gross gaming revenues for the quarter at P5.6 billion, down by 17.8 percent year-on-year.
Total expenses, which include direct costs and general and administrative expenses, remain flat for the quarter at P4.9 billion, as direct cost fell 2.5% to PHP 2.5 billion while general and administrative expenses increased 5.0% to PHP 2.4 billion.
TIHGI fell into a net debt position of PHP 2.1 billion for the first quarter of 2016 to support the company’s aggressive expansion projects. Notes payable is at P13.8 billion from P14.0 billion at the end of 2015 due to the strengthening of the Philippine peso against the US dollar.
“With the current state of the gaming industry here and across the region, TIHGI remains focused on pursuing quality of earnings for its shareholders by building on the non-VIP segment as well as expanding its non-gaming portfolio,” Kingson Sian, president and chief executive officer of TIHGI, said in a statement.
As for the gaming resorts non-gaming business that includes hotel, F&B, and other revenues, the TIHGI said that the non-gaming arm of the business posted positive year on year results with a 26% increase to PHP 982 million driven by the completion and 100% operations of the Marriot Grand Ballroom.
Hotel performance for the first quarter of 2016 remains solid with all three hotels – Maxims Hotel, Remington Hotel, and Marriott Hotel Manila registering average occupancy rate of above 83%. Total room count for the three hotels remains at 1,226, while the Marriott Grand Ballroom, the largest ballroom in the country, generated PHP 154 million worth of revenues or 15.7% of the non-gaming revenue for Q1 2016.
“While there is increased competition and existing challenges in the general gaming industry, we continue to be optimistic and identify innovative ways to further diversify our business,” Sian said. “The growth of our non-gaming segment is encouraging and positions us to generate real value for our shareholders and more sustainable earnings in the future.”
