Ainsworth Game Technology shares fell 10% yesterday to end at 80 cents, its lowest price since January 2012 after it revealed a slide in earnings for at least the first six months of 2018-19.
That update came on Friday, sending the shares down to 89 cents. They fell a further 9 cents yesterday to end at 80.5 cents.
That means the shares have now fallen more than 14% in the past month and are down well over 60% for the year so far.
In the update, Ainsworth revealed pre-tax profit in Australia will be materially lower in the current six-month period because “overall industry demand has fallen by around 10 percent”.
It expects a post-tax profit of $8 million, compared to $11.3 million for the July to December period in 2017.
It says it is having trouble getting products approved and has delayed launching some product launches until early 2019, and expects post-tax profit in the second half to be about $14 million.
“AGT has a positive outlook for performance and improved financial results in domestic markets in 2HFY19 compared to 1HFY19 with the expectation that new products gain traction with customers generating higher returns on investment,” the company said.
“AGT expects to deliver revenue growth and improved profitability in 2HFY19 compared to 1HFY19. The result in 2HFY19 is also expected to show growth in revenues and profitability versus the PCP excluding the significant benefit of sales to CDI (900 units) and to Novomatic (800 kits) realised in 2HFY18.
For the group overall, PBT excluding currency movements, for 2HFY19 is expected to increase by at least 75% on the $8.0 million expected in 1HFY19. A further update on the 2HFY19 will be provided at the time of the release of the interim results in February 2019.”
Danny Gladstone, CEO said in Friday’s statement that, “While AGT continues to make progress in driving growth in the key Americas markets, our performance in the highly challenging domestic markets is adversely impacting our overall results. With our investments in technology and increased R&D, and the release of newly developed gaming products, we expect to deliver improved results in both domestic and international markets in the second half of the year compared to 1HFY19.”
The question for investors from this downgrade is there any warning in it for the results later this week from the much larger Aristocrat Leisure (which is making most of its money from the US and gaming markets).
