New casino taxes hit Genting Singapore H1 earnings
Genting Singapore – operator of Resorts World Senotsa – said that higher utility tariffs and increased casino tax rates under a new regulatory regime meant its profit declined, even though revenue increased in H1.
The business reported revenue of S$663.1m (£399.3m/€472.2m/US$481.8m) for the half-year, up by 19.5% year-on-year.
Gaming brought in S$475.2m, up by 7.5%. Hotel room revenue was S$63.6m, while revenue from attractions more than doubled to S$69.7m and other non-gaming sources contributed S$43.6m.
The Genting Singapore board said the recovery came thanks to high demand for casino gaming following the impact of Covid-19, which was enough to make up for continuing challenges in international travel.
“While international tourism visitorship remained significantly below pre-pandemic levels due to limited flight capacity, extraordinarily high airfares and varying reopening protocols by our regional markets, the group has benefited from pent-up demand and made good progress towards recovery in the first half of 2022,” it said.
Rental income contributed a further S$6.7m, though this was the only segment where revenue declined, while hospitality and support services brought in S$4.4m, after minimal revenue in 2021.
However, while revenue rose, costs of sales – which include gambling taxes – grew faster, by 33.4% to S$463.0m. The new taxes came as part of an overhaul to the gaming industry in Singapore, which also included the launch of a new regulator and new definitions of illegal gambling.
As a result, Genting’s gross profit declined by 3.8% to S$200.1m.
Operating expenses also increased, mostly due to impairment of property, meaning that operating profit was down by 9.4% to S$110.2m. After finance costs, results from joint ventures and tax, Genting Singapore’s net profit was S$84.4m. This was a decline of 4.3% when compared to a year earlier.
As a result, earnings per share also declined, from S$0.73 to S$0.70.
Although profit was down, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was S$289.0m, compared to S$256.8m for the same period of 2021.
After the quarter ended, media reports alleged that MGM Resorts had approached Genting Singapore about a possible takeover. However, Genting denied these reports.