We saw a couple of results yesterday that went against the current gloomy trend. Programmed Maintenance Services nudged profit up 3% for the year to March 31 and lifted dividends, and Aristocrat Leisure seems to be getting back on track with higher interim earnings and dividends.
Shares in poker machine group, Aristocrat Leisure jumped more than 10% at one stage yesterday after the company surprised with an 11% gain in earnings and a higher dividend.
In the end the shares finished more than 5% higher at $4.30 (a gain of 25c), thanks to the net profit of $52.6 million (which was up 13% on a constant currency basis) from the $47.3 million earned in the first half of 2012.
And Aristocrat declared an unfranked interim dividend of 7c a share, up from 2c for the same period last year (or 40%).
The high profit was struck on a 7% plus fall in revenue to $A380.4 million (a 6.3% fall in constant currency terms to $383.2 million) from $A412 million in the first half of 2012. That was due to lower sales in Japan and Australia, while sales in the big US market rose 13% in what was the most encouraging bit of news.
The company said it had increased its dividend payout ratio to between 60% and 80% of normalised net profit, due to its strengthening financial position, helped by a lower interest bill as the company cut debt in the half year.
ALL YTD – Double Digit Growth
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And, the jump in earnings produced a confident outlook with CEO Jamie Odell saying in yesterday’s statement that the company expected to earn more than 2012’s $91.7 million.
He said the company expected that "second half net profit after tax performance to be broadly in line with the first half".
Reported fully diluted earnings per share of 9.5c represent a 9.2% increase (11.5% in constant currency) on the prior corresponding period.
The marginal drop in reported EBIT and 7.5% decrease in revenue largely reflect fewer scheduled game releases in Japan compared to the prior corresponding period. Excluding the variability driven by the Japanese game release schedule, EBIT increased 18.4%, Aristocrat said.
"North American operations delivered an improvement across all key business segments, demonstrated primarily through higher unit sales, improved average selling price (ASP) on new products, maintenance of ship share and a growing gaming operations footprint. Japan delivered one successful game release in the current reporting period and the Asia Pacific business grew significantly, supported by a product portfolio tailored to the markets in the region.
"The momentum in the Australian business continued as it cycled through the one-off Victorian rebuild sales in the prior corresponding period.
"Overall, Australian share has been maintained and improved ASP has increased EBIT margins demonstrating the effective execution of the Group’s product-led strategy", Aristocrat said.
A significant saving in interest expense continues to show the benefits of the Group’s focus on reducing debt levels.
Aristocrat is one of a large number companies that will benefit from the slide in the value of the Australian dollar this month.
The dollar is down 8% already (at around 95.55 USc) and that should help earnings for Aristocrat, if the fall is maintained into the second half.
