GGRAsia – Ainsworth half-year profit likely down 17pct sequentially

Ainsworth half-year profit likely down 17pct sequentially

May 09, 2024 Newsdesk Latest News, Top of the deck, World

Slot machine maker Ainsworth Game Technology Ltd expects half-year profit before tax to be at least 16.7 percent down sequentially.

The Australia-listed firm said in a Thursday filing it anticipated such profit for the first half of this year – excluding currency exchange impacts and one-off items – would be in the range of AUD13 million (US$8.5 million) to AUD15 million. That would be in comparison to the AUD18 million achieved in the second half of 2023.

Harald Neumann, Ainsworth Game’s chief executive, was cited as saying in the announcement: “The current economic conditions and political instability within Latin America has negatively impacted the company’s current results within this region.”

He added: “Prior periods benefitted from large contributions in sales within Argentina, which have not been repeated in our current results.”

Even for the first half of 2023, Ainsworth Game had confirmed a full write-down of the carrying value of investments held in Argentina.

In the latest bulletin, the firm stated that continued “economic and political instabilities within Latin America, specifically Argentina and Mexico,” was expected to result in a circa 13 percent sequential reduction in revenue from that region for the first six months of 2024.

Such Latin America revenue for the first half of this year was likely to be down 34 percent judged year-on-year.

But the company said that the North American market, which it described as its largest market by revenue, “continues to demonstrate positive indicators in first-half 2024, compared to the prior corresponding period”.

Improved product performance of the new A-Star Raptor cabinet and the initial success of the San Bao family of games have been progressively released in approved jurisdictions within the first quarter of 2024,” observed the company.

However, it added, “the full benefit of the improved performance and success is not expected to be fully reflected in the financial results for first-half 2024 due to timing delays in obtaining regulatory approval across various jurisdictions.”

“It is expected that as additional approvals are received, and performance on these products can be maintained at current levels, an increase in outright sales is expected within the second half of 2024,” stated Ainsworth.

Strategic review suspended

In Thursday’s filing, Ainsworth also said it had decided to “implement a hold” on a strategic review of its business, that had been announced in November last year.

“By placing a hold on the strategic review, the company will be able to focus on organic operations and ensure that the strategic review is not conducted during a period when the company’s financial results are not fully reflective of investments undertaken and the potential growth expected in coming periods,” stated the slot supplier.

Danny Gladstone, the company’s chairperson, was quoted as saying in the latest update: “The board has decided that given the current market conditions in Latin America, coupled with the short-term timing delays of product releases, the strategic review should be placed on hold at the present time to optimise the company’s financial results and performance”.

“We have pursued significant development initiatives in preceding periods which are not fully reflective in our current financial results,” he noted.

Mr Gladstone added: “As we progress through the ongoing product development cycle in coming periods, it is expected that prior investments will translate into improved financial results and provide greater opportunities to maximise shareholder value once achieved.”

The latest bulletin noted that investment in research and development “continues to be a key operational priority, with an increase in expense for the current period as compared to prior periods”.

Coming product releases included in North America for low-denomination slot products in the outright-sales segment, with such market introduction likely to be “within the second half of calendar year 2024,” noted Mr Neumann.

The firm added that the fresh product was likely to include “the contribution from the new game studios introduced during calendar year 2023, positioning the company favourably for market share gains” in core markets.