By Ian Neubauer
Aristocrat Technologies has cited smoking restrictions, increased club taxation rates and delays in the approval of new technology for a 12 per cent downturn in domestic unit sales for the first quarter of 2008 at the company’s annual general meeting in Sydney yesterday.
Overshadowing the meeting was the Victorian Government’s recent decision to revoke the exclusive licenses of Tabcorp and Tatts Group in the state when the current licensing period expires in mid-2012.
The decision has had a significant effect on the profit outlook of gaming manufacturers like Aristocrat, which does 15 per cent of its business in the Garden State.
Aristocrat also posted profit downturns in New Zealand and the US, where the subprime mortgage crisis and an associated credit crunch has led to consumers spending less on gaming and casinos spending less on new machines.
However, the gaming machine manufacturer posted a positive net outcome of $247.2 million attributed to healthy returns in emergning markets. This includes strong underlying growth in Asia-Pacific and Europe of 107 per cent and 174 per cent respectively, the company’s leading position in Macau and in 99.4 per cent revenue increase in Japan.
“While market conditions across much of our business are challenging and will impact on short term, the key fundamentals of our business model of pricing, cost leverage and cash flow remain very much intact,” Aristocrat CEO Paul Oneile said at the meeting.
“The growth potential of the company remains high and we have significantly progressed a number of key initiatives and innovations projects, which position us well to capture a substantial share of the global expansion of gaming as short-term market uncertainties lift,” he said.
Aristocrat shares have taken a pummelling over the past six months, losing a quarter of their value since November 1. Aristocrat shares were trading at $7.55 at 3:00pm today.
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