Poker machine and electronic game maker, Aristocrat Leisure will cut staff numbers and other costs and has suspended its interim dividend to counter the growing negative impact on its finances from the COVID-19 pandemic.
At the same time, it asked and got more money under a banking facility with its lenders on Friday.
“A range of prudent Group-wide cost reduction initiatives has been taken, including the elimination of discretionary, consultant and contractor spend in line with revised priorities as well as a general hiring freeze,” Aristocrat told the ASX Monday morning.
It said 1,000 staff will be temporarily stood down until the end of June, with an additional 200 roles permanently cut. A further 200 roles will move from a full-time to a part-time basis.
Most of the jobs affected are in the company’s US operations.
Salary cuts of 10% to 15% will be applied to 1,500 staff (of 4,000 staff all told) until the end of September 2020. CEO, Trevor Croker will take a 30% drop in his base salary.
The company on Monday said it would apply the JobKeeper employment subsidy to protect as many jobs as possible in Australia and was working to determine its eligibility for government stimulus measures in the United States.
“We are very sensitive to the impact of cost reduction measures on our people and we will work hard to support them through this difficult time,” Mr. Croker said.
The company said it usually earns an average of $US50.46 ($A78.75) a day from each of its 48,218 gaming machines across North America, for an average daily haul of about $A3.8 million, but almost all its land-based customers have suspended operations.
Aristocrat shares edged up 1.8% to $22.06.
Aristocrat said in Monday’s statement it has in excess of $1 billion of liquidity. “This is comprised of cash from operations and the drawdown of the Group’s $150 million revolving credit facility together with an additional $136 million headroom available from a successful upsizing of this facility on 24 April 2020.”
“The Group is well-positioned to preserve its strong balance sheet metrics during this period, including through the scaling back of capital expenditure. For context, gaming operations installed base growth is the business’ largest driver of capital expenditure, accounting for more than half of the $317 million spent in the financial year ended 30 September 2019.
“In addition, to further assist liquidity and position the Group for post-COVID-19 recovery, Directors have decided to suspend its progressive dividend policy and do not intend to declare an interim dividend as part of the Group’s half-year results scheduled to be released on 21 May 2020,” director said in Monday’s statement.
The company declared an interim of 22 cents a share in May of 2019. That saw over $140 million paid out, so not continuing with an interim this year saves a tidy amount of cash.
