Aristocrat flags softer demand as Covid-19 hits casino biz
Slot machine maker and digital games provider Aristocrat Leisure Ltd says it has decided to withdraw the group’s business-outlook statement for its fiscal-year 2020, including its suggestion of continued growth in net profit after tax and amortisation. The decision on withdrawing the outlook statement was due to “uncertainty as to the extent and duration of the impacts” of the Covid-19 pandemic, said the company in a Wednesday filing.
“In global land-based markets, softer demand is becoming evident as a number of customers initiate temporary venue closures and adopt a more cautious approach to capital expenditure,” stated Aristocrat. “Digital bookings are unaffected at this time,” it added in the announcement to the Australian Securities Exchange.
At the firm’s annual general meeting in February, Aristocrat’s chief executive Trevor Croker said the company was expecting “further incremental gains” in unit sales to land-based casinos.
Aristocrat has said it had introduced measures across its business to contain the spread of the Covid-19 virus, beginning with its Macau and Asia-Pacific operations. “Aristocrat is executing comprehensive short and longer-term risk management and mitigation plans, with the intention to position the business to emerge from the challenges caused by Covid-19 as quickly and strongly as possible,” it said in Wednesday’s filing.
In addition to implementing broad travel bans and social distancing measures, Aristocrat said that more than 80 percent of its workforce was currently allowed to “work from home, consistent with the advice of local health authorities”. The group said it employed more than 6,400 people.
In its latest filing, Aristocrat said it had a “conservatively-geared balance sheet,” with a net debt to earnings before interest, taxation, depreciation and amortisation ratio of 1.4 times as at September 30, 2019. In addition, Aristocrat’s term loan facility was not due until October 2024 and had fewer covenants, “providing significant financial flexibility”.
The Australia-based gaming manufacturer reported in November net profit after tax and amortisation for the fiscal year ending September 30, 2019 up 28.2 percent year-on-year, on revenue up 25.3 percent.
In Wednesday’s statement, Aristocrat said the diversity of its operations added “to the group’s strength and flexibility”. Over the 2019 financial year, digital games delivered over 40 percent of total group revenue, while land based gaming operations and outright sales contributed around another 30 percent each, stated the firm.
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