Aristocrat full-year profit halved, AUD0.1 dividend announced

Aristocrat full-year profit halved, AUD0.1 dividend announced

Casino slot machine maker and digital games provider Aristocrat Leisure Ltd said its normalised profit for the 12-month period ended September 30 declined by 46.7 percent. In a Wednesday statement, the company also announced payment of a final dividend, surprising some analysts.

The firm reported a normalised full-year profit after tax of AUD476.6 million (US$347.1 million). Aristocrat’s reported profit was however up by 97.2 percent, to almost AUD1.38 billion, impacted by the recognition of a AUD1.1 billion deferred tax asset.

Group operating revenue in the 12 months to September 30 decreased 5.9 percent year-on-year to AUD4.14 billion. Revenue in the land-based segment fell by around 32 percent in year-on-year terms, “driven by the impact of Covid-19 customer venue closures and social distancing restrictions,” said Aristocrat in commentary on its full-year results.

The firm said that its Class III premium and Class II electronic machine installed bases grew by 5.9 percent and 0.3 percent respectively in the 12 months ended September 30. The firm also reported “continued penetration” in its markets, of the group’s “leading hardware configurations and high-performing game titles” during the reporting period.

International Class III revenue and profit – i.e. excluding the Americas, Australia and New Zealand – decreased 38.2 percent and 65.7 percent respectively to AUD126.3 million and AUD32.3 million compared to the prior corresponding period, said the firm. That segment’s performance was negatively affected by “Covid-19 related venue closures across all regions and an increase in bad debt and inventory provisioning.”

Decline in global land-based business was offset by a 29-percent increase in revenue in the digital division, said Aristocrat.

Group earnings before interest, taxation, depreciation and amortisation (EBITDA) were 31.8-percent lower than the prior corresponding period, at AUD1.09 billion. The company said its EBITDA margin stood at 26.3 percent, decreasing against the prior corresponding period, when it was 36.3 percent.

Aristocrat stated it continued, during the reporting period, to “take a comprehensive approach to optimising liquidity and positioning the business for sustained, long-term growth, in line with its strategy”. The firm stated it had almost AUD2 billion of liquidity available at September-end.

The board of Aristocrat said it had authorised a final fully franked dividend of AUD0.1 – amounting to a total expense of AUD63.9 million, in respect to the period ended September 30. The firm said the decision was in view of Aristocrat’s “effective Covid-19 response” and “confidence” in the firm’s “strengthening performance.”

The dividend for 2020 represented a year-on-year decrease of 82 percent over dividend payout in 2019. The record date will be December 2 and the payment date will be December 18.

Aristocrat had decided not to pay an interim dividend for year 2020. It paid both an interim and final dividend in 2019, amounting in aggregate to AUD0.56.

Commenting on Aristocrat’s dividend payment decision, brokerage J.P. Morgan Securities Australia Ltd stated it “was a surprise” and ahead of consensus estimates. Analysts Don Carducci and Abhinay Jeggannagari added that the gaming supplier’s statutory profit for the 12-month period ended September 30 was in line with JP Morgan’s forecast, but ahead of consensus.

Aristocrat chief executive and managing director, Trevor Croker, was quoted in Wednesday’s release as saying: “In May, we said that Aristocrat entered the Covid-19 challenge in good shape. Six months on, and notwithstanding the uncertainties that remain, we believe we’re well placed to emerge from this period in even better shape.”

He added: “Our results for the full year to September 30 demonstrate that we have enhanced our financial fundamentals and further accelerated our underlying operational momentum, despite the exceptional challenges and volatility generated by Covid-19 on our business, customers, players and people across the majority of the period.”

In late April, the gaming supplier said it would be standing down about 1,000 staff and cutting down jobs, as part of efforts to “mitigate the impacts” of the coronavirus pandemic on the group’s business.

In its latest result announcement, Aristocrat said it had “made the difficult decision to temporarily stand down a significant portion” of its non-digital workforce earlier in the year, and it had “removed a number of roles” across its business portfolio.

The firm added: “Aristocrat’s board and management team agreed to a material reduction in remuneration from May 1, 2020 to September 30, 2020. A number of full-time roles were made part-time, and cuts of 10 percent to 20 percent of base salary were applied to around 1,700 staff globally during May 1, 2020 to September 30, 2020.”

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