Genting Singapore's attempt to get a handle on its bad debts took a massive step back in the third quarter.
The casino operator was forced to make a $92.5 million provision, more than double the $39.7 million it reported a year ago.
A bad debt provision is the sum a firm puts aside as a safeguard against amounts it deems difficult or impossible to collect.
The $92.5 million provision - the biggest since the $82 million in the fourth quarter last year - is likely due to difficulties in debt collection and greater caution by Genting in granting credit to VIP high-rollers amid the regional slowdown.
Genting's bad debt provisions had fallen 31 per cent in the second quarter to $56.6 million from a year earlier so the reversal in the third quarter will be seen as a setback.
The bad debt provisions coupled with fallout from a slowing Chinese economy sent net profit tumbling 62 per cent to $37.2 million from $97.4 million a year earlier.
The latest numbers from Genting show that its rival Marina Bay Sands has chalked up a substantial lead. MBS' Ebitda - a measure of profit before tax, interest and other items - jumped 10.8 per cent to US$389.7 million (S$554 million) while turnover rose 2.1 per cent to US$750.7 million for the three months to Sept 30. Its casino revenues rose 2 per cent to US$584.9 million.
In comparison, Genting's Ebitda fell 18 per cent to $209.2 million in the same period from $253.9 million a year earlier, while revenue dipped 1 per cent to $636.1 million from $644.8 million.
Net profit for the third quarter fell 47 per cent to $66.9 million, from $127.1 million a year ago. This includes $29.7 million apportioned to holders of perpetual securities. Genting's gaming revenue dipped 5 per cent to $451.8 million due to lower premium business volumes.
The firm said in a statement yesterday that it remains focused on growing the premium mass and mass gaming segments while continuing to restructure its slowing VIP premium business.
"With the continued uncertainty of China's economic strength, and its effect on the regional Asean economy, we continue to be cautious with our VIP premium business," said Genting Singapore president and chief operating officer Tan Hee Teck.
The company also said it was "disadvantaged in (its) marketing efforts" because it didn't have the "benefit of a collaborative partnership in another gaming jurisdiction (Macau) with a high volume VIP premium business".
The group's profit was also affected by fair value losses of $61.4 million on derivative financial instruments. But Genting recorded "a favourable foreign exchange gain of $113 million" in the quarter which helped offset the fair value loss from its portfolio investments.
But there was a silver lining. Genting's non-gaming revenue grew 10 per cent to $183.9 million due to higher turnover from its attractions and hotels, which recorded 88 per cent occupancy. Visits to Universal Studios Singapore jumped 17 per cent from a year ago to more than 21,000 in the quarter with the launch of new attractions.
The casino operator reported earnings per share of 0.31 cent from 0.80 cent, while net asset value was 59.7 cents as at Sept 30, down from 61.1 cents as at Dec 31 last year. No dividend was declared.
Genting Singapore shares closed 2.4 per cent or two cents down to 81.5 cents ahead of the results.
