Genting Malaysia has warned of significant negative impact on gaming operations at its Malaysian integrated resort, Resorts World Genting (RWG), as a result of the Coronavirus in 2020 after reporting a 3% decline in group-wide revenues to MYR 2.44 billion (US$580 million) in the three months to 31 December 2019.
While the majority of that decline was felt at RWG, which saw revenues contract by 6% to MYR 1.60 billion (US$380.2 million), Genting Malaysia said previous estimates of an expansion of the global economy this year were now under threat, placing added pressure on regional gaming operators.
“Downside risks are more pronounced due to heightened global concerns over the impact of the Coronavirus disease on the global economy,” the company said in its results announcement. “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.
“Demand for international travel is expected to decline in the near-term following the imposition of travel restrictions and widespread concerns surrounding the COVID-19 outbreak. The regional leisure and hospitality industry will be adversely impacted, including the gaming industry.
“Consequently, the Group is more cautious on the near-term prospects of the leisure and hospitality industry.”
The fall in revenue at RWG overshadowed improved results at Genting Malaysia’s global properties, particularly in the US and Bahamas where revenue grew 7% to MYR 368.5 million.
Group-wide, Adjusted EBITDA fell 26% to MYR 551.4 million (US$131 million) on a 29% decline at RWG to MYR 415.1 million. Profit for the quarter declined 60% from MYR 705.4 million in 4Q18 to MYR 282.2 million (US$67.1 million) this time around.
“During the period, the Group’s non-gaming segment recorded a 34% improvement in revenue as the entertainment offerings at Resorts World Genting (RWG) were well received,” Genting Malaysia said.
“Nevertheless, the Group’s decline in revenue and adjusted EBITDA was largely due to lower hold percentage in the mid to premium players segment as well as a decrease in volume of business in the mass market segment. Adjusted EBITDA was also impacted by higher gaming duties imposed.”
Genting Malaysia reported a 5% increase in revenue for FY19 to MYR 10.41 billion (US$2.5 billion), although Adjusted EBITDA declined 8% to MYR 2.64 billion (US$627 million).
The group returned to profit in 2019 at MYR 1.33 billion (US$316 million) due to an impairment loss on its investment in promissory notes issued by the Mashpee Wampanoag Tribe, which had resulted in a net loss in FY18.