Genting Malaysia Berhad saw its net profit fall 26% year-on-year to RMB253.1 million (US$60.3 million) in 1Q19, citing reduced volume in its gaming business due to lower incentives offered to customers at flagship IR Resorts World Genting.
The decline in profit comes despite an increase in revenue for the period, up from RMB2.40 billion to RMB2.74 billion thanks to “exceptionally higher hold percentage recorded in the mid to premium players’ segment.” Adjusted EBITDA grew 13% to RMB684.1 million, offset by higher casino duties.
“The Group’s earnings were also impacted by a provision for contract termination related costs of RMB198.3 million in relation to the outdoor theme park at RWG,” Genting Malaysia said, referencing an ongoing legal dispute with Walt Disney Co and Twenty-First Century Fox Inc over a contract to build a Fox theme park at Resorts World Genting.
The company also noted an increasingly tough operating environment in Malaysia, where the government last year announced significant increases in annual gaming taxes and levies.
“In Malaysia, the Group will continue to review its capital expenditure requirements and rationalize its operating cost structure to mitigate the impact of the hike in casino duties and the increasingly challenging operating environment,” it said.
“The Group will focus on leveraging the new assets to grow key business segments. To this end, the Group will place emphasis on intensifying database marketing efforts to optimize yield management, as well as improving service delivery and operational efficiencies at RWG to enhance overall guest experience.”
Genting Malaysia reported a 34% increase in Adjusted EBITDA to RMB 41 million and slight revenue growth to RMB419.3 million in its UK business, while the US booked a 6% increase in revenue to RMB367.0 million and 2% rise in Adjusted EBITDA to RMB66 million.