Australian slot manufacturer Ainsworth Game Technology Limited has warned investors that its pre-tax annual profit could fall to around $11 million from the $25.76 million it recorded for its previous fiscal year due to “challenging industry conditions” in its home market.
Despite recording a 38% increase year-on-year in international revenues and optimism surrounding its new Pacman game, Ainsworth Game Technology Limited revealed that first-half unit volumes for Australia have declined by approximately 30% although it expects these figures to improve in the second half of its fiscal year.
“In fiscal year 2017 we expect our international revenues to continue to grow,” said Danny Gladstone, Chief Executive Officer for Sydney-based Ainsworth Game Technology Limited. “With new hardware, games, the contribution from Nova Technologies, the benefits of the new facility in Las Vegas and with the delivery of the expected synergies with Novomatic, we are confident we will increase the company’s revenues and profitability from international markets.”
The firm declared that international markets now account for 71% of its revenues and have grown from around $17.15 million in 2011 to now stand at about $150.22 million. It stated that the Americas are now its “number-one focus” with earnings from these markets expected to improve by a further 40% this year.
Ainsworth Game Technology Limited explained that revenues from its North American operations rose by 34% year-on-year during its 2016 fiscal year with sales totaling $81.84 million and profits improving by 29%.
“We now have a strong and broad presence across North America,” said Gladstone. “We are well established in some states and new in other jurisdictions. Encouragingly, we saw ongoing growth in existing markets led by California, Canada, Louisiana and Wisconsin and we enjoyed a good contribution from new territories that were recently added. As we grew our North American business we continued to invest in innovation sales and customer support. We increased sales, service, production and support resources and in line with our strategy we built up a dual creative and design team over there. This team works closely with the Australian team in developing new technologies. We find this is a productive way to leverage, rather than duplicate our resources.”
For 2016, the company reported that underlying earnings before interest, tax, depreciation and amortization had improved by 12% year-on-year to hit $68.16 million with a return on equity of 18% while the company finished the year in a “strong financial position with a conservative balance sheet”.
“We are confident the investments undertaken in research and development activities will produce an increased pipeline of new product offerings across all markets,” said Gladstone. “The second half of fiscal year 2017 should be much better. We expect a significant improvement in profits in the second half as compared to the second half of fiscal year 2016. We will provide a further update to the market at the time of our next results in February.”