Australian slot machine maker Aristocrat Leisure Ltd announced on Thursday its results for the fiscal half year to March 31, and outlined its profit expectations for full year ending September 30.
Net profit after tax for the half year was AUD249.6 million (US$187.4 million), representing growth of 56.9 percent – or 53 percent in constant currency terms – compared to the AUD159.1 million delivered in the six months to March 31, 2016.
“This result reflected the strong performance delivered across the group’s global portfolio, particularly growth in Aristocrat Leisure’s Americas, digital and international Class III businesses, supported by sustained momentum in Australia,” said the firm in a filing to the Australian Securities Exchange.
“Class III” is a definition used in U.S.-based jurisdictions to refer to slot games in U.S. commercial casinos, as opposed to Class II lottery-style games, which are more commonly found in tribal casinos.
“Asia Pacific performance was strong, mainly driven by large-scale openings in the Philippines and Malaysia where market-leading ship share was achieved,” the company added in a separate presentation also filed on Thursday.
That document added: “The completion of the 1.1 regulatory churn cycle in Macau in fiscal year 2016 was more than offset by growth across the region.” That was a reference to replacement or upgrade of electronic gaming machines (EGMs) in the Macau market, occasioned by the city’s “EGM Technical Standards for Macau Version 1.1” originally issued in 2014.
Commenting on the results, analysts JP Morgan Securities Australia Ltd noted that Aristocrat’s “international Class III performed better than expected, with growth of 167 percent”.
“Platform unit sales were up significantly … and driven by new openings; consistent with our feedback from G2E,” analysts Donald Carducci, Shaun Cousins and Shalin Doshi wrote in a Thursday note. “We believe material uplift will continue as Lightning titles expand the Class III division and new fee-per-day arrangement.”
In its latest results, Aristocrat Leisure said its directors had authorised a dividend of AUD0.14 per share – franked at 25 percent – in respect of the six months ended March 31. The dividend amounts to AUD89.4 million in aggregate, said the company.
It represented an increase of AUD0.04, or 40 percent, on the prior corresponding period. The interim dividend is likely to be declared and paid on July 3. The firm said any future dividends are likely also to be partially franked.
The first half fiscal results also revealed that revenue increased by 21.6 percent compared to the prior-year period, to AUD1.23 billion. Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased 34 percent year-on-year to AUD498.9 million.
Operating cash flow of AUD401.9 million was over 41 percent higher than the prior-year period, which Aristocrat Leisure said reflected the strong operational performance of the business, together with a continued, rigorous focus on cash management.
The group said net gearing improved from 1.9 times at March 31, 2016, to 0.9 times at the end of the current reporting period, due to earnings growth and significant free cash flow generation across the group.
Aristocrat Leisure chief executive and managing director, Trevor Croker, was quoted saying of the latest reported numbers: “Aristocrat delivered outstanding results over the first half of fiscal 2017. Industry leading content, hardware and technology translated into exceptional operational performance despite competitive market conditions.”
He added: “Aristocrat’s strong balance sheet, improving debt ratios and substantial liquidity position provides us with ample flexibility for continued investment… consistent with our strategy and shareholders’ interests.”
The firm outlined its profit expectations for the full year to September 30, 2017.
It expects growth in normalised net profit after tax and before amortisation of acquired intangibles over the full year in the range of 20 percent to 30 percent, compared to the corresponding 2016 result.
It noted: “While this guidance implies a lower second half, it reflects a planned uplift in design and development investment, together with the [weighted] impact of the concentration of new openings in the first half of the financial year, which is not likely to be repeated in the second half.”
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”China has been strengthening the control over capital flow, and the impact of that has already been reflected [on Macau’s gaming revenue trend]. There should not be any bigger impact from the new… legislation [on the mainland] … on the gaming revenue trend here”
Wilfred Wong Ying Wai
President of Macau casino operator Sands China