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Genting Singapore PLC’s Latest Earnings

Genting Singapore PLC (SGX: G13) reported its fiscal fourth-quarter earnings yesterday evening. The reporting period was for 1 October 2015 to 31 December 2015.

As a brief background for some context, Genting Singapore is the operator of the integrated resort, Resorts World Sentosa. Among the resort’s many attractions are one of Singapore’s two casinos and the Universal Studios Singapore theme park.

You can learn more about the company in here or catch up with the results from the firm’s previous quarter here.

Financial highlights

The following’s a quick rundown on the latest financial figures from Genting Singapore:

  1. Quarterly revenue for Genting Singapore fell by 14% year-on-year to $547 million. For 2015, revenue was down 16% to end at $2.40 billion.
  2. For the fourth-quarter, net profit dwindled year-on-year by a stunning 82% to just $22 million. Net losses attributable to shareholders was $7.7 million for the quarter. For the full year, net profit was $193 million, representing a 70% decline from 2014. The profit decline came mostly from lower “other operating income,” lower gross profit, and higher fair value losses on derivative financial instruments. The net profit attributable to shareholders in 2015 was just $75.2 million, down 85% from 2014.
  3. Subsequently, earnings per share (EPS) was -0.06 cents in the fourth-quarter of 2015, a big decline from the 0.73 cents seen in the same quarter a year ago. For the whole of 2015, Genting Singapore’s EPS was 0.62 cents, 85% lower than in 2014.
  4. The picture looks better for Genting Singapore on the cash flow front. Cash flow from operations was $310 million for the fourth-quarter, while capital expenditures came in at just $15.7 million. This gave Genting Singapore positive free cash flow of $294 million for the quarter. For 2015, the casino operator logged in $1.09 billion in free cash flow. For perspective, Genting Singapore’s free cash flow in 2014 was $761 million ($956 million in cash flow from operations and $195 million in capex).
  5. As of 31 December 2015, Genting Singapore had $5.0 billion in cash and equivalents and $1.63 billion in debt. This is an improvement from the $3.7 billion in cash and equivalents and $1.7 billion in debt that the company had at the same date last year.

In all, revenue shrank for the full year, while profit fell by a massive 85%, Genting Singapore still maintained a healthy balance sheet and had generated positive and growing free cash flow.

On another note, Genting Singapore’s trade and other receivables (under current assets on the balance sheet) also fell from $1.1 billion at the end of 2014 to $646.4 million on 31 December 2015. Foolish readers may recall that my fellow Fool Stanley Lim had previously expressed his concern over the size of Genting Singapore’s current trade receivables. Changes in Genting Singapore’s receivables may be an area for investors to watch as well.

Finally, the resort operator’s board of directors had proposed a 1.5 cents final dividend per share, up from 1 cents per share a year ago.

Operational highlights

For the fourth-quarter, revenue from Genting Singapore’s Gaming segment (the most important segment) bore the brunt of the decline again. Revenue from this segment fell by 19% from $461.3 million in the fourth-quarter of 2014 to $374 million in the fourth-quarter of 2015. For the full year, the Gaming segment’s revenue was down by 21% year on year to $1.75 billion.

Elsewhere, revenue from the Non-gaming segment fared relatively better with a year-on-year decline of only 2% for the fourth-quarter. The segment recorded $650 million in revenue for 2015, unchanged from a year ago.

In the earnings release, Genting Singapore’s management team had included the following commentary on the quarter regarding the non-gaming segment:

“Universal Studios Singapore, a major revenue contributor of our non-gaming segment, registered a strong performance with attendance hitting a record high of 1.2 million for the quarter, the highest recorded since opening. Successful execution of events such as Halloween Horror Nights 5 and Santa’s All Star Christmas, as well as continued interest in the re-launched Battlestar Galactica dueling roller coasters and Puss In Boots’ Giant Journey attractions contributed to the strong performance.”

The company added that “despite an overall slowdown in tourism arrivals to Singapore, RWS Attractions business delivered a good performance.” Resorts World Sentosa had attracted nearly 7 million visitors (accounting for one-third of overall visitorship to Singapore’s tourist attractions) and its hotels had also “outperformed the industry in occupancy and average room rates.”

Genting Singapore also shared some thoughts in the earnings release on the problems at the Gaming segment and what it has been doing to turn the ship around:

“Gaming revenue was impacted by a lower VIP gaming market as we continue to tighten our credit policies. The decrease in revenue was partially mitigated by lower operating costs and overheads, which was achieved through various operational efficiency improvement initiatives.”

One of Genting Singapore’s major growth drivers is an upcoming integrated resort at South Korea’s Jeju Island. The company had provided some updates on the Jeju development in the earnings release:

“At the Group level, development of Resorts World Jeju is progressing as planned. Construction of the hotels, retail and entertainment parts of the integrated resort plot has commenced. The construction of residential plot is advanced, and we expect to commence sales in the second quarter of 2016.”

Foolish summary

At its closing price yesterday of $0.70, Genting Singapore traded at around 113 times trailing earnings.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.