Red ink and a restructuring at poker machine producer Aristocrat Leisure.
The Sydney-based company said it incurred a $33.1 million loss for the six months to June and the rebalance operations, it was introducing a "major transformation program" to stabilise earnings and focus on key markets in three countries, the US, Australia and Japan.
(Transformation is the new synonym for cost cuts and job losses: Fosters Group yesterday made frequent references to its ‘transformation’ program).
This will see the company concentrating on Australia, the US and Japan, and quitting a host of smaller and non profitable markets.
CEO Jamie Odell (who used to be a senior executive at Fosters, coincidentally) said the company’s transformation strategy was aimed at reducing earnings volatility and delivering sustainable value growth over the next three to five years.
"We will home in on the few game-changing opportunities that will make us successful," he said.
"This means a resolute focus on our major markets of North America, Australia and Japan.
"Doubling our share of the participation gaming market in North America over the next five years is our first priority.
"We will also grow our US systems and stepper businesses. We will increase our investment in US specific game development and make better use of leading edge technologies to add value to our portfolio."
Aristocrat said it would base more of its management team in North America, to embed the company in the region as a local business delivering tailored solutions to North American customers.
"In Australia, closing the gap between ship share and our installed base is also key.
"We are committed to the Australian market for the long term, but must become more responsive to customer feedback.
"We will increase investment in dedicated game content for the Australian market, and promote innovative licensing options along with a more customer focused sales model."
Mr Odell said better managing volatility in Japan was a third core objective of the transformation strategy.
"We are aiming to consistently achieve a minimum of 2 licensed game releases and over 50,000 unit sales per annum in Japan over the longer term. We will implement strategies to optimise our game approval slots and make greater use of licensed characters, while improving core processes and building management capability."
Revenue fell 5.3% to $441.686 million for the half year, and earnings before interest and tax fell into the red to a loss of a loss of $13 million.
Aristocrat said its normalised profit after tax was down 38.1%, to $44.155 million.
Aristocrat declared a dividend of 4.5 cents, fully franked, down sharply from the 14 cents paid in the first half of fiscal 2008.
ALL shares fell 2.1% to $4.52, a fall of 10 cents on the day.
Mr Odell, said in the statement that the company was "disappointed with the results amid challenging global conditions".
He announced that Aristocrat would embark on a "major transformation strategy … to produce sustainable, long term growth for the business".
"We are disappointed with the results amid challenging global conditions," Mr Odell said.
"Operators continue to be cautious in terms of capital spending and new venue openings slowed markedly.
Mr Odell said Aristocrat’s net loss of $33 million was due largely to a non-cash write-down of $79.9 million against the Group’s investments and associated inventories in its multi-terminal gaming businesses, PokerTek and Elektronèek.
During the period, Aristocrat’s North American operations had a 9.7% fall in revenue to $US164.8 million and a 16.2% drop in profit to US$62.0 million as casino operators were hit by a downturn in business, especially in Nevada.
Aristocrat said it saw an 11% fall in profit from its Australian business to $22.4 million, but Aristocrat says that it’s just re-launched VIRIDIAN cabinet and GEN7 platform into Queensland and its new licensing model would help lift penetration and earnings.
Aristocrat’s Japanese division posted a loss of $5.3 million, compared with profit of around $26 in the first half of 2008.
"While economic conditions in Japan remain challenging, the planned launch of a major new licensed title in the second half is expected to deliver benefits," Aristocrat said.
And Sydney-based paint company Wattyl Ltd is looking for a small improvement in the coming year after reporting a loss of $1.5 million for the year to June.
That loss was sharply down on the profit of $11.7 million earned in 2008.
"The result reflects the difficult trading conditions in Australia and New Zealand," the company said.
"Sales revenue for the Company and its controlled entities was 9.3% lower than the previous year with Australia down 8.3% and New Zealand down 16.6%.
"The lower sales were primarily due to the de-ranging of some product lines at select retailers and a suppressed housing market.
As expected Wattyl said in a statement to the ASX that no dividend was being declared.
Wattyl said the outlook remained uncertain but the company expected a "modest" improvement in sales in Australia and New Zealan
