The chief executive-elect of slot machine maker Aristocrat Leisure Ltd promised investors growth and product renewal as he addressed its annual general meeting in Sydney, Australia, ahead of his official appointment on Wednesday.
The new CEO, Trevor Croker (pictured in a file photo), a long-serving executive with the firm, also told shareholders the group expected to record normalised net profit after tax – and before amortisation of acquired intangibles – up by between 20 percent and 30 percent year-on-year for the financial year ending September 30, 2017.
Mr Croker noted the business had delivered “strong performance” over the first four months of the financial year. He said it would build on the “outstanding momentum” achieved under the leadership of outgoing CEO Jamie Odell, who steps down on Tuesday after eight years in charge.
In comments reported on Sunday by the Australian Financial Review newspaper, Mr Odell described the Aristocrat he had inherited in 2009 as a “burning platform” as a result of the product “not competing very well,” and having lost its “innovating edge”.
Mr Odell arrived at Aristocrat with a non-gaming background, having been previously managing director for Australia and Asia Pacific at brewer Fosters Group Ltd.
His successor Mr Croker, served under Mr Odell for seven years as part of the Aristocrat group’s turnaround team.
On Monday, Mr Croker told shareholders the firm would not “sit still” under his leadership, but nor would it engage in “change for change’s sake”. He said he wanted to ensure maintenance of a “hungry and humble culture that takes nothing for granted”.
Net profit after tax at Aristocrat jumped 88 percent year-on-year in the 12 months to September 30, 2016, the firm had said in a filing to the Australian Securities Exchange in November. Performance in the ‘rest of the world’ market had been positively affected by “two major openings and market churn in Macau,” said Mr Odell in his Monday comments to shareholders.
The CEO-elect Mr Croker said that while protecting its core business in so-called Class III video slot machines for the pubs, clubs and casinos markets, Aristocrat would “aggressively pursue value-adding opportunities,” including via natural growth and mergers and acquisitions.
He said examples of growth opportunities included the segments for Class III so-called ‘stepper’ slot machines; as well as video lottery terminals and Class II video gaming machines, the latter a reference to products for the tribal gaming markets in North America. Aristocrat currently had “no presence” in each of these adjacent segments, said Mr Croker, but noted the firm had displayed such products at the Global Gaming Expo (G2E) casino industry trade show in Las Vegas, Nevada, in September.
In the Class III stepper segment, an initial portfolio of games had been approved and launched in the market in a small number of properties, said the CEO-elect. Aristocrat says its is also gaining ground in the Class II video gaming machine segment, after acquiring in 2014, U.S.-based Video Gaming Technologies Inc, a provider of gaming machines for the tribal gaming market in North America.
“Our increased capabilities and momentum gives us confidence to attack these [segments] with focus and vigour over the coming years,” the CEO-elect told shareholders on Monday.
Mr Croker is to be based in the United States, where the Australian group has many of its largest customers.
The firm has also been expanding in online and social games segments. It launched at the end of December a digital platform application called Cashman Casino. The group says it is designed to complement its Heart of Vegas app. The latter was first released for the social media platform Facebook in 2013.
Ian Blackburne, the group’s chairman, on Monday said Mr Odell had agreed to make himself available in an advisory capacity for 12 months during the CEO transition. A press release from the firm added that Mr Odell would be paid AUD250,000 (US$192,381) for the 12-month consultancy.
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"VIP growth [in Macau] is roaring back on the heels of last year’s economic stimulus – but we think this could stall once the effect of the stimulus and the Chinese housing bubble wears off – as it did in 2013-14"
Cameron McKnight and Robert Shore
Analysts at Wells Fargo Securities