GGRAsia – Delays, competition means Ainsworth to miss 2H profit target

Delays, competition means Ainsworth to miss 2H profit target

May 07, 2019 Newsdesk Latest News, Top of the deck, World

Ainsworth Game Technology Ltd, an Australia-based maker of slot machines, has reduced its forecast profit for the financial second half after the company faced what it termed heightened competition and delays in approvals of new products.

Ainsworth told the Australian Securities Exchange on Tuesday that it now expected profit before tax, excluding one-off items, to be about AUD4 million (US$2.8 million) in its financial second half ending June 30, less than the sum it forecast in February.

“This result has been impacted by intense competitive market pressures and delays encountered in new product approvals which were not achieved in the expected timeframes,” Ainsworth told the exchange. “These approvals are now being progressively secured and are expected to translate into improved product performance and domestic market share gains in financial year 2020,” it added.

“Continued progress within the Americas has partially offset this lower-than-expected contribution from Australia in the second half of financial year 2019, with North America expecting a similar and Latin America a slight increase in their respective segment results compared to the first half of financial year 2019,” stated the firm.

“In addition, Ainsworth now expects as part of the finalisation of the financial year 2019 results to reduce the balance-sheet carrying values of its Australian and digital assets with a non-cash impairment charge. This charge is expected to be around AUD5 million and includes the value of the goodwill associated with the New South Wales service business, given lower New South Wales unit volume sales (AUD2.4 million), and a AUD2 million reduction in the value of the Ainsworth’s shares in 616 Digital,” it added.

The company said it is continuing to develop new products and technologies that will improve profit in the future. Ainsworth will also seek better collaboration with its major shareholder, Novomatic AG, “and other external content providers”.

Austria-based Novomatic AG has been Ainsworth’s majority owner since January last year, and its strategic partner in sales and technology.

In February, Ainsworth announced that its profit in its financial first half ended December 31 was AUD12.14 million, 25.8 percent more than a year earlier, on revenue of AUD118 million 1.9 percent less than a year earlier.

At the time, the company told shareholders the company’s reduced revenues from the Australian market reflected “the challenging domestic market and competitor factors, especially in [Australian states] New South Wales and Queensland”. It flagged an improved performance for its second half on the strength of better products. The company’s biggest markets in the first half were North America and Australia.