GGRAsia – Aristocrat profit up 28pct as revenue continues to increase

Aristocrat profit up 28pct as revenue continues to increase

Nov 20, 2019 Newsdesk Industry Talk, Latest News, Top of the deck

Australia-based slot machine maker Aristocrat Leisure Ltd on Wednesday reported net profit after tax and amortisation for the fiscal year ending September 30 up 28.2 percent year-on-year, on revenue up 25.3 percent.

Such profit was AUD840.4 million (US$573.4 million), compared to AUD655.3 million in the prior year. Revenue for fiscal 2019 reached nearly AUD4.40 billion, compared to AUD3.51 billion a year earlier.

Aristocrat Leisure said that group-wide on a normalised basis – excluding the impact of certain significant items and adjustments – its net profit after tax and amortisation grew by 22.6 percent year-on-year, to AUD894.4 million. Operating revenue on a normalised basis stood at AUD4.40 billion, up 22.7 percent from the previous year.

The company said the 2019 result “was driven by continued strong operational momentum across both land-based and digital businesses, supported by currency and tax benefits.”

Aristocrat did not provide detailed business information for its performance in Asia in the year ended September 30.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) for the latest 12-month period increased 20.2 percent year-on-year in reported terms, to nearly AUD1.60 billion. Aristocrat said that demonstrated the firm’s “continued ability to grow top line revenue profitably.”

EBITDA margin for the period however declined by 0.8 percentage points, to 36.3 percent, with “margin expansion across the land-based business partly offsetting the expected moderation driven by the full period impact of the lower-margin digital acquisitions,” said the firm.

For the latest 6-month reporting period, the Aristocrat board authorised a final dividend of AUD0.34 per share – in aggregate AUD217.1 million – franked at 100 percent. The final dividend is likely to be paid on December 17.

‘High-quality profit growth’

Trevor Croker, Aristocrat’s chief executive and managing director, said in a prepared statement the firm had “delivered another year of high-quality profit growth in fiscal 2019, further extending our track record of share taking and organic momentum, driven by strong investment in talent, product portfolios and marketing across our land-based and digital businesses.”

He added: “Sustained operating performance drove strong free cash flow generation, which was in turn invested to fund further growth, pay progressive dividend increases and provide significant balance sheet optionality for the future.”

JP Morgan Securities Australia Ltd said in a Wednesday note that Aristocrat’s net profit for financial year 2019 was above the brokerage’s forecast “due to positive tax benefits, forex tailwind, and gaming operations/margin expansion.”

Analysts Donald Carducci and Abhinay Jeggannagari said “confidence in another 12 months of land-based performance is evident as the question remains on monetisation of [digital game] RAID and pipeline/stabilisation of social casino development.”

Aristocrat gave on Wednesday a brief forecast for fiscal 2020. “In land-based outright sales, we anticipate further incremental gains in attractive North American adjacencies. We expect to maintain market-leading share positions across key for sale segments globally.”

It added: “In land-based gaming operations, we expect continued expansion across our total gaming operations installed base, leveraging our broadening portfolio, while maintaining market-leading average fee per day performance across the overall combined installed base.”

The firm said additionally it expected “continuing to lift design and development investment across our land-based and digital portfolio – in absolute dollar terms – while remaining broadly in line with the prior years, from a percentage of revenue perspective.”