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Malaysia – Genting warns of further impact on full year earnings

By - 27 November 2020

Increases in COVID-19 infections will hamper Genting Malaysia’s fourth quarter revenue in Malaysia, the UK and the US after a recovery of sorts and a narrowing of losses in the three months to September 30.

Local demand at its flagship Resorts World Genting in Malaysia helped drive revenue of RM1,416.9m, representing 54 per cent of the total revenue registered in the third quarter ended 30 September 2019 (3Q19).

The Group’s leisure and hospitality business in Malaysia resumed operations in mid-June 2020 with reduced capacity and stringent health and safety protocols in line with guidance from the authorities. Revenue from this quarter recovered to 66 per cent of 3Q19 levels.

Genting said: “The group registered lower volume of business from the general market and non-gaming segments. Nevertheless, the impact to the group’s earnings was mitigated by recovery in mid to premium players segment, which achieved relatively similar level of business against 3Q19. The Group also recorded an adjusted EBITDA of RM424.7m, aided by a reduction in payroll and related expenses due to lower headcount. This represents 80 per cent of the adjusted EBITDA reported in 3Q19.

“In the United Kingdom (UK) and Egypt, the group reported a decrease in revenue by 68 per cent to RM131.4m and an adjusted loss before interest, taxation, depreciation and amortisation (LBITDA) of RM50.5m. This was largely due to the lower volume of business recorded after operations at the group’s UK casinos resumed with reduced capacity from mid-August 2020. Additionally, Crockfords Cairo in Egypt and certain of the group’s land-based casinos in the UK remained temporarily closed throughout 3Q20,” it added.

In the United States of America (US) and Bahamas, the group recorded lower revenue by 80 per cent to RM69.9m and an adjusted LBITDA of RM71.7m.
“This was primarily due to the temporary closure of Resorts World Casino New York City (RWNYC), which resumed operations with reduced capacity since September 9 2020. Nevertheless, the impact to the group’s earnings was alleviated by lower payroll cost and operating expenses at RWNYC. Despite the restrictions, the reopening of RWNYC has been well received and operating performance at the property is improving.”

“In Malaysia, economic activity is projected to improve supported by monetary and fiscal measures. Nevertheless, the introduction of targeted actions to contain the COVID-19 outbreak is expected to affect the recovery momentum of the domestic economy. The recovery prospects of the leisure, hospitality, and tourism sectors globally remain highly uncertain as the COVID-19 situation continues to evolve. While the regional gaming market has registered signs of early recovery, the industry is expected to remain challenging in the near-term. In Malaysia, the government’s implementation of a Conditional Movement Control Order in most of the states in the country will have an impact on the Group’s business. Nevertheless, the group will continue to re-engineer itself to adapt to the new operating environment to drive productivity and efficiency whilst ensuring the health and safety of its guests, employees and the community in RWG. Meanwhile, the group remains committed to the timely completion of outdoor theme park, which is targeted to open by the middle of 2021. 3 In the UK, the group’s land-based casinos which reopened on 15 August 2020 have temporarily closed since November 4 2020 in compliance with the latest government directives. To cope with the fluidity of the new operating environment, the Group will continue to be agile in its approach at streamlining its cost structure and identifying operational efficiencies. In the US, the Group is encouraged by the positive reception to the resumption of RWNYC and Resorts World Catskills’ operations since 9 September 2020. The group will continue to develop its strong local market exposure by executing various strategies to drive visitation and frequency of play at both properties.

“Given the dynamic operating environments both locally and abroad, uncertainties surrounding the full impact of the pandemic on the Group’s operations and financial performance remain. The Board wishes to caution that the group expects its financial results for the financial year ending 31 December 2020 to be adversely impacted.”

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