Genting Singapore's luck has taken a dive as second-quarter earnings swung into the red with a net loss of $16.9 million.
This compared to a net profit of $102.3 million a year earlier.
The casino operator, which issued a profit warning last week, reported yesterday that it had suffered a net foreign exchange loss of $84 million and fair value loss on derivative financial instruments of $95 million.
Mr Tan Hee Teck, Genting Singapore's president and chief operating officer, said yesterday that the group's net profit for the quarter was affected by fair value losses from "compound financial instruments or equity-like instruments" in which it had invested.
"These related to our investment in public-listed hospitality and gaming companies," he said.
GENTING AT A GLANCE
REVENUE: $578.1 million (-23%)
NET LOSS: $16.9 million (Not meaningful)
"We have substantially reduced our investment in this portfolio. Because it is related to the gaming industry, over the last six to nine months (due to unfavourable market conditions) the value of the shares have dropped quite a bit."
Genting reported $296.5 million in adjusted Ebitda - a measure of operating profit - for the quarter, down 6 per cent from a year earlier. Revenue fell 23 per cent to $578.1 million from $751 million a year earlier as gaming revenues plunged 28 per cent to $428.3 million.
The company cited the gaming industry downturn in Asia and unfavourable global VIP premium business and rolling win percentage as factors.
Genting also cited volatile currency markets for "an unrealised foreign exchange loss (of $84 million) during the quarter that is reflected in the Ebitda".
"The group holds foreign currencies, predominantly Hong Kong dollar in the course of normal business transactions and United States dollar for overseas investments," it said.
Including $29.4 million apportioned to holders of perpetual securities, net profit for the second quarter plunged 91 per cent to $12.5 million from $131.7 million a year ago.
The casino operator reported loss per share of 0.14 cent from earnings per share of 0.84 cent, while net asset value was 60 cents as at June 30, down from 61.1 cents as at Dec 31 last year. No dividend was declared for the quarter.
Genting's rival, Marina Bay Sands (MBS), posted a sharp 11.4 per cent drop in second-quarter revenues to US$713 million (S$1 billion) and a 13 per cent plunge in Ebitda to US$363.3 million, as mass market gaming growth was offset by the drop in VIP win percentage and a stronger US dollar.
For the quarter, MBS' casino revenues slipped 12.5 per cent to US$565.7 million.
Meanwhile, Genting's bad debt provisions fell 31 per cent to $56.6 million from a year earlier as the group is more cautious in granting credit in the face of weak market conditions and has "tightened its credit collection procedures quite significantly", Mr Tan said.
"As we have said in our first-quarter earnings call, we are much more cautious in giving credit to premium VIP business. We are concerned with the situation in China and the rest of Asia, and we have given less credit, and therefore our rolling volumes came down," he said. "We have also significantly increased our focus on credit collections."
Genting, whose results were released after the market closed, fell 2.5 per cent or two cents to 78.5 cents.