KUALA LUMPUR (Nov 28): Gaming-to-plantation conglomerate Genting Bhd (KL:GENTING) reported a 57% drop in its third-quarter net profit, as it was hit by higher property, plant and equipment (PPE) write-off totalling RM207.3 million, as opposed to RM1.3 million previously.
Net profit for the three months ended Sept 30, 2024 (3QFY2024) was RM223.8 million, compared with RM520.52 million for the same period a year earlier. Revenue fell 11.2% year-on-year to RM6.54 billion from RM7.37 billion due to declining contributions from its leisure and hospitality division.
The latest quarterly revenue was the lowest since 1QFY2023, when it logged revenue of RM5.82 billion.
Besides registering higher PPE write-off during the quarter under review, Genting’s earnings before interest, taxation, depreciation and amortisation (Ebitda) also came in lower at RM2.32 billion, compared with RM2.73 billion in the corresponding quarter last year.
The lower Ebitda was mainly dragged by its leisure and hospitality and power segments, according to Genting. The leisure and hospitality segment saw its profit before tax (PBT) fall 37% to RM1.5 billion during the quarter, while the power segment’s PBT declined 24% to RM100.6 million.
No dividend was declared for the latest quarter.
For the nine months of FY2024, the group’s net profit rose 35.1% year-on-year to RM1.05 billion from RM779.1 million, as revenue grew 5% to RM20.84 billion from RM19.85 billion.
Lower Ebitda across leisure and hospitality segment, except for the UK and Egypt
Under its leisure and hospitality segment, Resorts World Sentosa (RWS) in Singapore recorded lower revenue and Ebitda during the quarter, mainly driven by lower VIP rolling volume and win rate.
Meanwhile, its sister resort, Resorts World Genting (RWG), notched lower Ebitda primarily due to higher operating expenses.
Its UK and Egypt businesses saw higher revenue and Ebitda during the quarter due to higher volume of business. However, lower Ebitda was recorded in Resorts World New York City and Resorts World Bimini, mainly due to lower revenue and higher operating and payroll-related expenses.
“RWLV [Resorts World Las Vegas] remains focused on operations and profitability in 3Q24. Hotel occupancy and Average Daily Rate (“ADR”) in 3Q24 were 85.1% and USD244 respectively compared with 91.1% and USD246 in 3Q23,” said Genting in the results announcement.
An abnormally hot summer in Las Vegas and economic uncertainty in an election year impacted results in 3QFY2024.
Power, plantation disappoint, but investments and others rises to the occasion
Genting’s power division saw its PBT decline to RM100.6 million from RM132.9 million last year, affected by lower generation from the Banten plant in Indonesia following a longer outage period of 53 days for its first major scheduled maintenance, which took place between Dec 2023 and Feb 2024, and annual maintenance, which took place in July 2024.
Its plantation division’s PBT slipped 1% year-on-year to RM199.7 million in 3QFY2024 from RM202.3 million last year on lower sales volume of palm products, leading to higher inventory levels.
Meanwhile, its investments and others segment recorded PBT of RM418.9 million, compared with a pre-tax loss of RM85.6 million in the corresponding quarter last year, mainly attributable to recognition of net unrealised foreign exchange translation gains recorded by Genting Malaysia Bhd (KL:GENM) on its US dollar-denominated borrowings in 3QFY2024, compared with net unrealised foreign exchange loss last year.
Genting said the outlook for international tourism is expected to remain broadly positive, driven by strengthening global demand, improved air connectivity and ongoing recovery in key markets.
This positive momentum is expected to support the continued recovery of the regional gaming market, it said.
For Malaysia, Genting said it will continue to invest in innovative products and experiences, including new ecotourism attractions, which are expected to be rolled out in 2025.
In the United Kingdom, Genting said it will continue to focus on improving operational efficiency and productivity, whilst actively exploring opportunities to grow its market share.
In the US, the group will focus on reinforcing its market position by enhancing marketing efforts to drive visitation and expand its customer base.
Additionally, the group will continue to closely monitor developments surrounding the New York Gaming Facility Board’s Request for applications, which could lead to the introduction of up to three new commercial casinos in New York.
For Singapore, the group continued to accelerate its transformation to enhance its destination appeal and visitor experiences amidst a slower recovery of international visitor arrivals to the city-state.
As developments progress at Resorts World Sentosa 2.0 (RWS 2.0), Genting will be unveiling new and elevated visitor experiences progressively in phases, it said.
Shares of Genting fell one sen or 0.27% to close at RM3.75 on Thursday, translating into a market capitalisation of RM14.54 billion. The stock has dropped 18% since the start of the year.