March 21, 2014

RWM posts 59% drop in 2013 net income

Travellers International Hotels Inc (RWM) reported 2013 net income of P2.74b, down 59% YoY, and implying a net loss of P834m in 4Q13. Gaming revenues grew 7% YoY but this was more than offset by a 50% increase in promotional allowances that resulted from aggressive marketing in face of new competition. Promotional allowances include higher prize money for tournaments and the fair value of rewards points given to loyal customers. Salaries and wages also grew up 37% to P3.75b.

While drops volume grew by an average of 22% (+27% in the VIP segment) on increased customer base, these were offset by lower win rates in the VIP segment (from 3% in 2012 to 2.6% in 2013)and for Electronic Table Bames (from 25% to 22.7%). Win rates in the mass market tables and slots were relatively steady. EBITDA also fell 27% YoY to P6.72b, translating to an EBITDA margin of 21.8% in 2013 from 31.2% in 2012.

Our take: The results included some P694m in forex losses and P113m in unrealized loss on interest rate swap pertaining to the impact of the peso depreciation and forex management exercises related to the company’s $300m bond. Taking these out, the recurring income would have been P3.54b, still down 62.8% YoY. At any rate, this was still way below the P6.73b consensus forecast. We will comment further on the results pending more details from tomorrow’s investors’ briefing.– WealthSec