No sign of any market nervousness about the shares of Aristocrat Leisure (ALL) with its annual results yesterday – as we saw a week or so ago when the much smaller Ainsworth Game Technology (AGI) shocked investors with a downgrade at its annual meeting.
Ainwsorth shares plunged sharply on the downgrade, blamed on weak sales of poker machines, especially in Australia.
Aristocrat yesterday revealed a statutory full-year loss of $16.4 million, compared to a $107.2 million profit a year ago thanks to losses and one-off items relating to the write-down in the value of its Japan Pachislot business and the sale of Aristocrat Lotteries.
Before those one-offs, the company said profit rose 10.2% to $118.1 million, after tax, for the year to September, on a 7% rise in revenue to $870.3 million.
Aristocrat shares rose 1.9% to $6.73 as investors were encouraged that the company had taken action on the value of its Japanese assets.
Dividends for the year were boosted 10.3% to 16c a share with the payment of an 8c a share final. Total payment is equal to 76% of pre-one off earnings.
ALL YTD – Aristocrat shares shrug off Japan writedowns
But the result could have been better – as revenue growth was cut by Aristocrat’s underperforming Japanese business. Excluding Japan Pachislot, revenue was up a more impressive 13%.
The company reported a number of significant items, including a $78 million write-down on the value of that Japanese business and a $43.4 million loss from the sale of its non-core Lotteries business.
In October it also acquired the US-based business Video Gaming Technologies.
Aristocrat chief executive Jamie Odell said yesterday this acquisition was a “bold step" designed to position the company for the future.
"In addition, the disposal of our non-core Lotteries business and the adjustment in the carrying value of the unique and volatile pachislot business in Japan reduce risk and management distraction going forward," he said.
"Our results reflect a revitalised core product pipeline that is approaching full strength and driving consistent share and value growth in line with our strategy."
Mr Odell said that in 2015 the company would see its market share increase, but weak demand in key segments of the business would be a constraint.
“2015 will be a transformative year for Aristocrat as we integrate the VGT business and take the next step forward in executing our vision to deliver the world’s greatest gaming experience every day.
“While we expect our operational momentum and market share performance to lift further over the full year to 30 September 2015, generally flat to weaker demand in a number of key segments will be a constraint.
"Aristocrat will continue to focus on the things we can control – in particular improving our portfolio focus, competitiveness and earnings mix over the 2015 full year.
“We expect to see a significant lift in the percentage of total revenues that are recurring in nature, as we integrate VGT and continue to grow recurring revenues in our Class III and Digital businesses over the course of 2015” Mr Odell added.
