Shares in poker machine maker, Aristocrat Leisure fell nearly 3% yesterday after the annual meeting was warned that the strong Australian dollar could impact the company’s profits this year.
The shares dropped 13c to $4.30 after the warning was given by CEO, Jamie Odell.
"While it is still relatively early in the year, I would reiterate the potential adverse impact on our company’s 2010 net profit of sustained strength in the Australian dollar through 2010," Mr Odell told shareholders yesterday.
"A one-cent movement in the Australian dollar impacts our bottom line by around $1.3 million.
"We expect the translational impact of FX (foreign exchange) will be seen predominantly in the first half.
"We therefore anticipate overall performance for 2010 will be weighted towards the second half of the year."
The company isn’t expecting any growth in the global gaming machine market until next year, so 2010 will be a year of consolidation and little earnings progress, from what the AGM was told.
"Our Company has made important progress throughout 2009, and are pleased to be on track with some positive signs emerging," Mr Odell said.
"However, we acknowledge that we are in the early stages of a 3 to 5 year turnaround program.
"We have a lot of work ahead to embed the improvements we’re making across the business and turn them into sustainable top-line momentum.
"The remainder of 2010 is going to be a year of accelerating the implementation of our strategy, amid challenging and turbulent market conditions across the world.
"As we have consistently said, we are not expecting broader growth in the key global gaming markets before 2011.
"We will maintain our focus on holding share and building our capability and competitiveness in order to make the most of improved conditions through 2011 and beyond."
Mr Odell also said profits also could be affected by increased interest funding costs associated with litigation in the US over convertible bonds.
Aristocrat has made a $187.3 million provision for a potential damages liability associated with the convertible bonds litigation.
"The interest costs associated with the convertible bonds litigation have been previously calculated to 30 April, 2010, but will continue to accrue beyond this date until the final judgement has been delivered by the court, the timing of which is not within the company’s control," Mr Odell said.
In February, Aristocrat booked a net loss of $157.84 million for calendar 2009 as it experienced difficult conditions across all of its markets.
