Genting Malaysia reported a decline in net profit during the first quarter of 2019, falling 26 percent to RM253.1 million (US$60.4 million).
Genting Malaysia said the decline was due to an overall lower volume of business in its gaming segment, largely due to lower incentives offered to customers.
The group reported revenue of RM 1.9 billion while adjusted EBITDA was at RM555.6 million.
Genting said EBITDA was supported by lower marketing expenses for the mid to premium player business, as well as lower payroll and related expenses due to a reduction in the number of employees. However, this was offset by higher casino duties.
The group’s earnings were also impacted by a provision for contract termination related costs of RM198.3 million in relation to the outdoor theme park at RWG.
Analysts had been patiently waiting for Genting’s Q1 results to determine the extent of the impact of the tax hike which came into effect in January. Analysts said that cost control will be key to wading through difficult times.
“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.
“Additionally, 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 the overall guest experience.”
In its UK and Egypt business, the group’s operations saw a marginal improvement in revenue, while adjusted EBITDA grew 34 percent.
“In the UK, the Group remains committed to streamlining its operations and improving overall operational efficiency to strengthen its position in the country. The Group endeavors to continue delivering sustainable performance by managing business volatility in the premium players segment. The Group will also place emphasis on efforts to grow its market share in the mass market segment. The Group is encouraged by the improvements recorded at Resorts World Birmingham and will continue implementing various initiatives to grow visitation and business volume at the property,” it said.
In its United States and Bahamas business, the group’s revenue grew 6 percent, mainly due to foreign exchange gains.
“In the US, RWNYC remains the market leader by gaming revenue in the northeast US region. While the operations at RWNYC continue to deliver steady growth despite a crowded market, the Group will continue to boost its direct marketing efforts and introduce various promotional activities to drive visitation and frequency of play at the property.”
“In the Bahamas, the Group remains focused on enhancing infrastructure and connectivity at Resorts World Bimini. This includes leveraging partnerships with renowned brands to drive visitation and revenue at the resort, it added.