The Singapore-based casino operator Genting Singapore PLC reported a net-profit growth for the first three months of the year after the company improved its room for manoeuvre and expanded its margins.
Last Friday, it became clear that the casino and resort operator witnessed an increase of almost 17 times in comparison to the first three months of the previous year. This means that the company’s registered profit for the first quarter of 2016 is SGD10.8 million and for the same January-to-March period the company’s net profit is SGD181.1 million. The company stated that the revenue marked a decline by 3.5% for the whole year, but there is also an increase in the net profit, which is said to be the result of the improvement the company’s margins.
The company’s report offers some interesting tendency. While the amount of revenues is decreasing, the Genting Singapore PLC is not only still staying on the surface, but also increasing its profit. The reason is the decrease in the company’s sales expenditures, which on the other hand, compensates for the revenue decrease.
Thus, expressed in figures the situation for the first three months of the year can be presented as following: the gaming revenue is estimated to be SGD434.4 million (3.6% lower in comparison to the previous year) and the earnings before interest, taxation, depreciation and amortisation (EBITDA) are SGD283.2 million (47.1% higher than the previous year). Based on these data, it is not hard to calculate the operating profit of the company, which is SGD261.5 million.
Consequently, the jump of EBITDA means higher profit for the company. According to the representatives of the company, the increase in the operating profit is achieved thanks to acquiring a rational credit policy and expanding the company’s margins. This, on the other hand, led to decreasing the number of the given incentives to players with bad credits to SGD15.0 million, compared to the first three months of the previous year, when the amount of the given incentives was estimated to be SGD92.4 million.
Another reason for the increase of the net profit of the company is the sale of 50% of its shares to a resort in Jeju, South Korea. The amount of money, which the company gained by this move is reported to be $96.3 million. According to Union Gaming, the growth of the company is supposed to be gradual, because the market is still not that developed. This is not a surprise, having in mind that gambling in Japan was accepted as legal on 26th December, 2016.
The right incentive program, the improving of the margins and the sale of a stake to South Korea helped Genting Singapore PLC to take a solid position on the market and improve the amount of its net profit. Experts see these actions as smart moves by the company to protect itself from significant losses and rise to its feet.
