Aristocrat draws a dud as losses mount
Sydney Morning Herald
Wednesday February 24, 2010
THE gambling machine manufacturer Aristocrat Leisure has warned of another tough year and a longer road ahead, after posting a $157 million loss and a 16 per cent drop in revenue.Aristocrat's chief executive, Jamie Odell, said the company suffered challenging conditions across all its markets in 2009, as operators were cautious about spending and new venues were cancelled or delayed."Against the backdrop of difficult market conditions our reporting result for this year is not good enough and we are a long way off our full potential," Mr Odell said yesterday. "It's clear that we are a work in progress."The loss was underpinned by $274.3 million in one-off items, including a $187.3 million provision for an expected damages liability associated with convertible bonds litigation in the US. Aristocrat also spent about $9.6 million in the second half of 2009 on redundancies.The company reported a normalised net profit of $116.4 million.Aristocrat expects only slight improvement in North America this year, offset by lower expansions, and expects flat markets in Australia and Japan.The Deutsche Bank analyst Mark Wilson said the outlook was likely to disappoint the market and the 2009 result was "of lower than expected quality".Aristocrat would face pressure this year from foreign exchange rates, higher net interest expenses, a weaker North American market and no repeat of a prepaid licence fee in Australia, he said."Notwithstanding these risks, Aristocrat is making solid progress in a challenging environment and is gaining share in the key North American and Australian markets," Mr Wilson said.Mr Odell said the company was only six months into its three-to-five-year turnaround strategy, and several positive elements were starting to show in the underlying performance.They included stronger earnings in the fourth quarter of 2009 and the growth in market share, he said.He also spruiked the appointment of Victor Blanco, who will lead the company's "global platform architecture team" after working on the Xbox and on mobile phone platforms for Microsoft and Google.Aristocrat's total revenue dropped to $908.6 million. It estimates markets in North America and Japan shrank by about 30 per cent. Revenue from the Australian market rose 12 per cent to $207.8 million, and profit rose 21.6 per cent to $63 million.Shareholders will not receive a final dividend, after receiving an interim 4.5c a share for the first half of the year.Aristocrat shares closed at $4.270 yesterday, down 23c.
© 2010 Sydney Morning Herald
