Genting Hong Kong flags consolidated net loss of not less than US$1.5b for FY20
KUALA LUMPUR (March 15): Cruise ship operator Genting Hong Kong has issued a profit warning to inform its shareholders that the group expects to record a consolidated operating loss of not less than US$600 million (RM2.47 billion) and a consolidated net loss of not less than US$1.5 billion for the year ended Dec 31, 2020 (FY20) based on the preliminary review of its unaudited consolidated management accounts.
For comparison, the group posted a consolidated operating loss of US$96 million and a consolidated net loss of US$159 million for the year ended 31 December 2019.
In a filing to the Hong Kong stock exchange, its chairman and chief executive officer Tan Sri Lim Kok Thay said the anticipated increase in the consolidated net loss of the group is mainly attributable to prolonged suspension of fleet-wide operations across the group’s cruise and cruise-related businesses for Dream Cruises, Crystal Cruises and Star Cruises as well as the suspension of shipbuilding operations at MV Werften’s shipyards in Germany between March 2020 and October2020.
“This led to impairment losses being recorded on certain intangible assets, property, plant and equipment and other assets and loss on disposal of interest in certain subsidiaries which owned non-core assets,” he said.
He also said the COVID-19 outbreak caused the group to cancel many sailings and suspend almost all of its cruise operations temporarily since February 2020.
However, he said the group has been working with various governments to start domestic cruises.
“These initiatives provide more visibility in the future of the group and the leadership role of the group to re-start cruising after COVID-19,” he said.
According to him, with the support from the relevant authorities, Dream Cruises’ Explorer Dream was given the approval to operate two, three and four night “Taiwan Island-Hopping” cruises departing from Keelung to Kinmen, Penghu and Matsu islands from 26 July 2020 making Taiwan one of the earlier markets to reopen cruise travel.
Meanwhile, the group’s Dream Cruises’ World Dream started to operate domestic cruises in Singapore since November 2020 with positive earnings before interest, taxes, depreciation, and amortization contribution.
Its Genting Cruise Lines also announced recently Crystal Cruises’ New Close-to-Home Bahamas Escapes from Nassau and Bimini beginning July 2021.
“With her new Bahamas Escapes cruises, Crystal Serenity becomes the first ship to homeport in The Bahamas as well as the first ocean ship to sail from the Americas since the cruise industry’s voluntary halt in operations almost a year ago,” he said.
With the resumption of Crystal Serenity, he said, Genting Cruise Lines will have 41% of its entire fleet in operation (based on total lower berths), the highest proportion of all cruise companies in the world, following the restart of Dream Cruises’ Explorer Dream in July 2020 in Taiwan and World Dream in Singapore in November 2020.
Lim said it is expected that the COVID-19 pandemic will continue to impact the group’s businesses, adding that as the COVID-19 crisis continues to unravel, the group is unable to predict with certainty the ultimate impact it would have on the group’s business, its financial condition and its financial performance.
“However, with the launch of global mass vaccinations programme, the group will continue to implement cost optimisation initiatives as well as preparation works to resume cruising. On the other hand, the group continues to work closely with its financial creditors to finalise the group’s restructuring proposal and to agree on a holistic restructuring solution for the group,” he said.
At the time of writing, shares of Genting Hong Kong rose 4 sen or 7.84% to HK$0.55, valuing the group at HK$4.67 billion.