Genting Singapore, the operator of Resorts World Sentosa, experienced an increase in revenue during the first half of the year, although its profit declined. The company attributed the profit decline to higher utility tariffs and increased casino tax rates imposed under a new regulatory regime.
Despite these challenges, Genting Singapore reported a revenue of S$663.1 million, representing a 19.5% year-on-year growth. The recovery in revenue was primarily driven by strong demand for casino gaming, compensating for the ongoing limitations in international travel. However, the implementation of new taxes and higher costs of sales resulted in a decline in gross profit and net profit.
Revenue Breakdown:
Genting Singapore’s revenue for the first half of the year was comprised of various sources. Gaming revenue reached S$475.2 million, reflecting a 7.5% increase compared to the previous year. Hotel room revenue contributed S$63.6 million, while revenue from attractions more than doubled, amounting to S$69.7 million. Other non-gaming sources accounted for S$43.6 million. Additionally, rental income generated S$6.7 million, although it experienced a decline. Hospitality and support services generated S$4.4 million, showing significant progress compared to minimal revenue in 2021.
Impact of Regulatory Changes:
Genting Singapore faced challenges due to a new regulatory regime in Singapore, which included higher utility tariffs and increased casino tax rates. As a result, the costs of sales, including gambling taxes, grew by 33.4% to S$463.0 million. This affected the company’s gross profit, which declined by 3.8% to S$200.1 million.
Profit and Earnings:
Operating expenses also increased, primarily due to property impairment, leading to a 9.4% decrease in operating profit, amounting to S$110.2 million. After considering finance costs, results from joint ventures, and taxes, Genting Singapore reported a net profit of S$84.4 million, representing a decline of 4.3% compared to the previous year. Consequently, earnings per share also declined from S$0.73 to S$0.70. However, adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) improved to S$289.0 million, compared to S$256.8 million for the same period in 2021.
Outlook and Denial of Takeover Reports:
Despite the profit decline, Genting Singapore remains optimistic about the recovery and the strong demand for casino gaming. The company acknowledged the challenges in international tourism due to limited flight capacity, high airfares, and varying reopening protocols in regional markets. Moving forward, Genting Singapore sees potential for further recovery as regional travel gradually resumes. Additionally, it denied media reports suggesting a possible takeover by MGM Resorts.
Genting Singapore showcased revenue growth in the first half of the year, driven by robust demand for casino gaming. However, the company faced challenges due to regulatory changes, including higher utility tariffs and increased casino tax rates.
These factors resulted in a decline in gross profit and net profit. Nevertheless, Genting Singapore remains focused on the recovery of the industry and the potential revival of regional travel. By adapting to the regulatory landscape and capitalizing on domestic demand, the company aims to drive future growth and enhance its financial performance.