SINGAPORE (Feb 22): Genting Singapore swung back into the black in 4Q16 with earnings of $159.2 million from a loss of $7.8 million a year ago, thanks to lower expenses and impairment on trade receivables.
This resulted in a more than tripling of FY16 earnings to $266.3 million from the previous year, despite a 7% fall in revenue to $2.2 billion.
Revenue for the quarter grew 2% to $557.7 million from $547.4 million, buoyed by a 7% growth in revenue contributions from the gaming segment to $398.6 million from $374 million in the previous year.
Resorts World Sentosa generated sales of $557.1 million, which is 30% higher compared to a year ago. This was lifted by gaming revenue as a result of higher rolling win percentage in the premium player business and the revised strategy to focus on better margin business, says the group.
But the higher revenue from Genting’s gaming division was partially offset by an 8% decline in revenue from the group’s non-gaming segment to $158.5 million from $173 million.
Cost of sales fell 13% to $346.7 million from $399.8 million a year ago. Other operating expenses fell 84% to $16.6 million while administrative expenses declined 30% to $33.6 million.
Notably, the group’s 4Q impairment on trade receivables registered a 14% decline to $38.9 million from $45.3 million in the previous year since Genting Singapore recalibrated its credit policies and remodelled its commission structure, hence lifting profit margins in the VIP gaming business.
In its outlook, Genting says it continues to adopt a measured approach in the VIP gaming business in a macroeconomic and political environment of ongoing uncertainty, coupled with a difficult Asian gaming market.
A volatile exchange rate regime resulting from the current uncertain global political setting may negatively impact its marketing programmes, it adds, although the group remains optimistic in delivering sustainable earnings growth.
Nevertheless, the group highlights that its integrated resort (IR) hotels have continued to outperform industry-wide matrices with a consistently high room occupancy rate of more than 90% at stable average room rates. It also believes it is well-placed and has sufficient financial resources to bid for Japan’s gaming license as it continues to track the progress of the IR execution bill in Japan.
Genting says it also intends to execute a corporate finance strategy over the next three years which will fulfil its various investment requirements, including IR projects, while allowing it to maintain an efficient capital funding model.
The group has proposed a final dividend of 1.5 cents to be paid in cash.
Shares of Genting Singapore closed 1% higher at 98 cents on Wednesday.
