SINGAPORE (May 13): Thus far, integrated resort and casino operator Genting Singapore (GENS) has benefited from Singapore’s status as a tourist hub. But with the Covid-19 outbreak stalling travel and hospitality industries, the company is now facing headwinds.
In its latest business update, the company says the impact of the pandemic was first felt in late January, with the situation taking a turn for the worse over the quarter as countries took to implementing travel restrictions and border closures to contain the spread of the virus.
For 1QFY2020 ended March, GENS booked earnings of $148.9 million, some 55% lower than earnings of $329.7 million a year ago. In particular, earnings from the company’s Singapore Integrated Resort (IR) plunged 53% to $159.3 million.
GENS says the severity of the Covid-19 impact on its earnings was partially mitigated by a series of cost control measures, including instituting a pay reduction scheme for all managerial team members and encouraging all employees to take annual leave.
Revenue for the quarter fell 36% year-on-year to $406.9 million. Contributions from both the gaming and non-gaming segments for the Singapore IR fell 38% and 34% respectively, while revenue from the others segment fell 30%.
“The pandemic has been absolutely devastating to the tourism industry across the world,” says GENS.
“Our flagship property, Resorts World Sentosa (RWS) too, has been severely affected and will continue to face significant challenges,” it adds.
In light of the stricter circuit breaker measures announced by the Singapore government on Apr 3, GENS took what it terms an “unprecedented step” of suspending almost all operations at RWS in compliance with the directives.
“The suspension of operations is likely to continue into the near future,” says GENS, adding that social distancing and restrictive border regulations will continue to hinder any medium term recovery for RWS.
Given the fluidity of the unfolding COVID-19 situation, GENS says it remains pessimistic on its outlook for the remainder of 2020, and is bracing for its financial performance for the year to be “severely impacted.”
In a bid to cope with potentially volatile and long drawn recovery process, the company has adopted an ‘agile and continuous learning mindset’ to align its cost structure with the new norm.
“Our group has strategically built up a strong balance sheet over years that will enable us to continue operating smoothly and pursuing growth both at RWS and globally within our core expertise despite the ongoing crisis,” says GENS.
The company is also quick to stress that its Japan IR investment continues to be a part of its long-term growth strategy. Earlier in the day, Las Vegas Sands Corp said it will not push forward to bid for a license in Japan.
GENS has reportedly been engaged in the ongoing Request for Concept (RFC) by Yokohama City and is anticipating the launch of the Request-for-Proposal (RFP) in 2H2020.
Shares in Genting Singapore closed 0.5 cent lower, or 0.65% down, at 76 cents on Wednesday prior to the announcement.
