Genting Malaysia Berhad Sees Lower Quarterly Profit As Theme Park Contract Termination Highlighted
Posted on: May 28, 2019, 04:54h.
Last updated on: May 28, 2019, 04:54h.
Profit at Genting Malaysia Berhad dropped over 25 percent in the recent first quarter, with company officials highlighting that results were impacted by a delayed outdoor theme park at Resorts World Genting.
The company saw $64 million in Q1 profit in contrast to $85 million for the same quarter in 2018. Q1 revenue was approximately $654 million compared to about $573 million in Q1 of last year.
The quarterly numbers were “impacted by a provision for contract termination related costs” of RM198.3 million (US$ 47.3 million) regarding the theme park, according to a company statement.
Potential If Theme Park Opens
The venue — 20th Century Fox World — was to be located at Resorts World in Genting Highlands, Malaysia. Initially, it was scheduled to open later this year in the highlands outside of Kuala Lumpar.
In 2013, 20th Century Fox and Genting agreed the theme park would feature rides and attractions based on popular Fox movies and franchises. But Genting contends that after it spent $750 million, Fox pulled out last year, allegedly under pressure from Walt Disney Company executives.
Disney took over 20th Century Fox in March. Disney didn’t want their family-friendly image sullied by gambling. And Disney wanted Fox’s assets for Disney’s own popular theme parks.
Genting sued 20th Century Fox and Disney for $1 billion for breach of contract. Fox and Disney countersued Genting, with the legal battle continuing.
A note last Friday from Maybank Investment Bank Bhd said Genting Malaysia had “upside potential” if the theme park eventually opens.
As far as the Genting’s outlook on the Asian area:
The regional gaming market is expected to be increasingly challenging amidst the uncertain economic backdrop, as evidenced by the recent performance of certain gaming operators in Macau and Singapore.”
Additionally, on the region, the company “remains cautious on the opportunities and growth potential of the leisure and hospitality industry.”
In Malaysia, the company will try to grow “key business segments.” It will intensify database marketing, improve service delivery, and strengthen efficiency at Resorts World Genting “to enhance overall guest experience,” the statement adds.
In Malaysia, economic growth “is expected to continue at a slower pace in view of the subdued sentiments surrounding the global and domestic environment.”
Specifically, in the United Kingdom, the group will emphasize “efforts to grow its market share in the mass market segment.” The group also “remains committed to streamlining its operations and improving overall operational efficiency to strengthen its position in the country.”
Like every other major casino operator in the world, Genting hopes to acquire one of the three permits for an integrated casino in Japan. No word yet on which companies will get the licenses.
Tribal Casino Faces Questionable Future
Another issue raised in the Q1 note is a Massachusetts tribal casino — supported by Genting investments — that has been delayed, too.
The company’s bid to build a $1 billion casino in Taunton in partnership with the Mashpee Wampanoag tribe was thrown into jeopardy last year. The US Department of the Interior ruled that the previous administration had taken land into trust to the tribe in error and reversed the decision.
Genting was forced to declare a $440 million impairment charge in its Q3 accounts. It represented financial backing extended to the Mashpee for the proposed casino.
A federal bill that reaffirms the status of the Mashpee Wampanoag land was approved by the House of Representatives earlier this month. If approved by the Senate and signed into law by President Donald Trump, the bill could help pave the path for the casino.
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