Genting HK swings to profit as casino business picks up

PUBLISHED : Tuesday, 31 August, 2010, 12:00am
UPDATED : Tuesday, 31 August, 2010, 12:00am

Shares in cruise operator and Philippines casino investor Genting Hong Kong rose to a fresh 31-month high yesterday after the company said it swung to a profit during the first six months of the year.

Genting Hong Kong, part of Malaysia's Genting Group, said cost cutting on its Asian cruise operations and positive profit from its new Manila casino helped offset disappointing results at its 50 per cent-owned Norwegian Cruise Line unit, which posted a loss during the period.

The owner of Star Cruises, Asia's biggest cruise line, booked a net profit of US$11.32 million in the first half compared with a loss of US$35.26 million a year earlier. Sales, mainly gaming revenues from onboard casino operations, rose a modest 5.1 per cent to US$184.74 million.

Gaming revenue from casino cruises in international waters, which include nightly sailings from Victoria Harbour, were essentially flat at US$105.82 million and accounted for 57 per cent of group revenue.

Revenue from passenger ticket sales rose 23.5 per cent to US$50.48 million.

Profitability was improved at the Asian cruise business through a renewed focus on cost cutting, including a 24 per cent reduction in expenses related to sales, administration and other general costs.

The company booked a maiden profit of US$10 million from its first land-based casino investment, Resorts World Manila, a 50-50 joint venture with Philippines-listed Alliance Global Group.

Genting Hong Kong in 2008 agreed to pay US$335 million for a half-stake in the venture. The under-development casino-hotel complex began opening in phases in August last year.

The positive contribution from the Manila project helped to partially offset losses at Norwegian Cruise Line (NCL), a joint venture that focuses on the North American market.

Genting Hong Kong booked a loss of US$17.49 million on its 50 per cent stake in NCL compared with a profit of US$5.19 million a year ago. Rising fuel prices and higher interest expenses contributed to the loss at NCL. Genting Hong Kong sold half of NCL to Apollo Management in 2008 for US$1 billion.

Shares in Genting Hong Kong edged up 0.88 per cent yesterday to close at HK$2.29, the highest close since January 2008. The stock has risen more than 80 per cent in the past three months.

Back in the black

The owner of Star Cruises booked a net profit in the first half of, in US$: $11.3m