Genting Hong Kong has warned that it expects to record another operating loss in 2020 amid growing uncertainty over the resumption of its core cruise ship business due to the global COVID-19 outbreak.
The bleak outlook comes after the Asian-based gaming and cruise operator released its FY19 financial results on Friday, which saw a narrowed loss of US$96.2 million for the year, down from US$141.5 million in 2018.
Genting Hong Kong has been forced to suspend the majority of its cruise operations as well as all work in its three shipyards in Germany as a result of the coronavirus pandemic. As previously reported by Inside Asian Gaming, the company has already implemented measures aimed at reducing costs including cutting the wages of managers and imposing a company-wide recruitment freeze. Its executive team has also waived their entire 2020 salaries.
However, it said on Friday that there remained no definitive timeline for re-launch of any cruises.
“Genting Dream will recommence operation when the Singapore authority reopens its cruise terminal,” Genting Hong Kong said. “In the interim, the Company will continue to evaluate alternative deployment plans for World Dream while the Star Cruises fleet has suspended operations until the situation in the region improves.
“With the rapid transmission of COVID-19, the Group anticipates an operating loss in 2020, despite efforts and remedial measures taken to contain costs. The magnitude of the impact on the Group’s performance is difficult to quantify as the COVID-19 outbreak continues to spread globally. The Group will continue to monitor its business closely during this temporary disruption and adjust its plans in the best interest of the Group.”
Genting Hong Kong reported a 2.4% year-on-year decline in revenue in FY19 to US$1.56 billion on lower third party revenue from its shipyard segment, which was partially offset by gains in its cruise segment. The company said its cruise EBITDA improved from US$152.4 million to US$189.8 million while shipyard EBITDA showed a narrowed loss of US$23.3 million compared to US$59.6 million in 2018.
However, its share of profit from joint ventures fell from US$13.5 million to US$9.7 million due primarily to a smaller contribution from Travellers International Hotel Group, Inc, the operating entity of Resorts World Manila of which Genting Hong Kong holds a 39% stake.
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