RGB International Bhd, a Malaysia-based distributor of gaming products, reported a profit before tax of MYR20.5 million (US$4.7 million) for the three months ending June 30, 2024. This represents a decline of 30.4% compared to the same period last year. The decrease in profit was primarily attributed to a significant reduction in sales within its core Sales and Marketing (SSM) division.
Decline in Sales and Marketing Division
The company experienced a substantial drop in revenue, which fell by 70.2% year-on-year to MYR99.6 million (US$22.9 million) in the second quarter of 2024. This decline was mainly driven by a 77.7% decrease in revenue from the SSM division, which only managed to generate MYR67.9 million (US$15.6 million) in revenue during the period. The SSM division’s segment profit also suffered, dropping by 50.1% to MYR15.2 million (US$3.5 million).
RGB International Bhd explained that the previous year’s higher revenue was due to a bulk order that significantly boosted sales in the second quarter of 2023. In 2Q23, the company reported a revenue of MYR333.7 million (US$76.8 million), which underscores the sharp contrast in this year’s performance.
Growth in Technical Support and Management Division
Despite the challenges faced by the SSM division, RGB’s Technical Support and Management (TSM) division showed resilience and growth. The TSM division reported a 2% increase in revenue, reaching MYR29.8 million (US$6.9 million) for the second quarter of 2024. More impressively, the profit for this division surged by 139% to MYR6.0 million (US$1.4 million), highlighting strong operational performance and effective cost management.
Future Prospects and Strategic Focus
Looking ahead, RGB International remains optimistic about its future prospects, citing favorable market conditions in key regions, particularly in the Philippines. The company emphasized the potential for growth in the gaming sector, driven by expansions and new developments in the market.
The Philippine gaming regulator, PAGCOR, recently announced that the country’s Gross Gaming Revenue (GGR) for 2023 reached a record high of Php285 billion. The GGR is projected to grow further to Php336 billion in 2024, spurred by the opening of new casinos and the continuous expansion of the electronic gaming segment. As a major slot machine distributor and a key player in the machine concession business in the Philippines, RGB is strategically positioned to benefit from this expected market growth.
Key Contract with PAGCOR
RGB International also provided an update on a significant US$81 million deal with PAGCOR to supply nearly 2,000 slot machines for use in Casino Filipino branches. The company stated that it expects to begin delivering these machines in the second half of 2024 and to complete their installation by the end of the year. This contract represents a substantial opportunity for RGB to enhance its market presence in the Philippines and capitalize on the expanding gaming industry in the region.
While RGB International Bhd faced a challenging second quarter due to a sharp decline in sales from its core SSM division, the company remains confident about its growth prospects in the gaming market, particularly in the Philippines. With strategic contracts and a focus on expanding its presence in key markets, RGB is well-positioned to navigate the current challenges and capitalize on future opportunities in the gaming industry. The company’s performance in the TSM division further underscores its ability to adapt and thrive in a competitive environment.