GGRAsia – Genting HK expects ‘significantly higher’ 1H loss

Genting HK expects ‘significantly higher’ 1H loss

Aug 03, 2020 Newsdesk Latest News, Rest of Asia, Top of the deck

Genting Hong Kong Ltd, a Hong Kong-listed operator of casino cruise ships and shipyards, as well as an investor in the Resorts World Manila casino resort in the Philippines, warned in a Monday filing that its first-half loss would be “significantly higher” compared to a year earlier, because of suspension of most its operations within the latest reporting period due to Covid-19.

The group’s first-half loss for 2019 had been US$55.2 million.

The anticipated increase in the unaudited consolidated net loss of Genting Hong Kong for the six months to 30 June this year, would be “due to the suspension of operations across the group’s cruise businesses” (namely Dream Cruises, Crystal Cruises and Star Cruises), suspension of shipbuilding operations at MV Werften’s shipyards in Germany, and “severely restricted operations and revenue generation at its entertainment and leisure businesses” namely Resorts World Manila and Zouk nightclub in Singapore.

On July 26, outside the first-half reporting period, the group said its Dream Cruises brand was ready to restart its cruise services for the Taiwan market.

On Friday the Philippine government said that a general community quarantine in Metro Manila – aimed at acting as a Covid-19 countermeasure – would stay in place until August 15. But on Monday, the authorities said Metro Manila was reverting to a tighter protocol, known as “modified enhanced community quarantine”, due to an uptick in Covid-19 cases in that country’s capital.

Casino complexes in the Metro Manila area, including Resorts World Manila as well as the other large-scale private-sector venues City of Dreams Manila, Okada Manila, and Solaire Resort and Casino, have been closed since mid-March due to the pandemic.

Genting Hong Kong noted in its latest filing to the Hong Kong Stock Exchange that it had taken a number of “cost reduction, cash conservation, and capital-raising measures to deal with the resultant loss of revenues from its operations”.

In March the firm had announced that its top executives had “waived 100 percent of fees and compensation” from February until year-end, and that it would be cutting jobs amid the pandemic-related disruption to its business.

In its Monday update, Genting Hong Kong said it had reduced “onshore operating expenses” by steps including a reduction in the number of employees, reduction of salaries for those retained, and implementation of “no-pay leave”.

It had also cut “shipboard operating expenses,” by “laying up” most of the group’s ships with the exception of the Explorer Dream, which had “commenced domestic voyages in Taiwan” on July 26. Other exceptions were the SuperStar Aquarius and the SuperStar Gemini, which had been “leased to the Singapore government”. According to media reports, the Singapore authorities are using the ship to house migrant workers who have recovered from Covid-19.

Genting Hong Kong had also suspended “all capital expenditures” other than those “required to maintain the safety and security of its ships and the health and safety of its guests and employees”, said Monday’s filing.

The group had also delayed delivery of two new vessels – Crystal Endeavour and Global Dream – under construction at its MV Werften shipyards, “for about a year”.

The firm said it was “improving the group’s debt maturity profile” by securing a deferral of up to 12 months for principal repayments amounting to approximately US$220 million; and was seeking additional sources of finance from Germany’s Economic Stabilisation Fund “to fund the resumption of construction work at the shipyards”.

It was also “seeking additional sources of finance to maintain its cruise businesses pending resumption of sailing,” stated Monday’s filing.

Covid-19 had “created significant uncertainty over when authorities in the relevant cruising markets will allow resumption of the cruise travel,” warned Genting Hong Kong.