World Gaming Insight

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Aristocrat profit down 46.7% in FY20 but digital growth drives solid revenue retention

Australian slot machine giant Aristocrat Leisure Limited has reported a 46.7% decline in normalized net profit after tax for the year ended 30 September 2020 to AU$476.6 million (US$348 million), impacted by the closure of gaming venues around the world and ongoing capacity constraints due to social distancing requirements.

The company’s FY20 results, published early Wednesday, reflect a 5.9% decline in group revenue to AU$4.14 billion (AU$2.99 billion). Aristocrat said the decline was felt entirely in the gaming segment, which fell 32% year-on-year including a 31.4% fall in the Americas to US$934.7 million, a 38.5% fall in Australia and New Zealand to AU$280.5 million (US$204.8 million) and 38.2% fall internationally to AU$126.3 million (US$92.2 million).

Those results were offset by the digital segment, which booked a 31.3% increase to US$1.61 billion thanks to mobile game “Raid: Shadow Legends” and social casino growth.

Normalized EBITDA declined 31.8% to AU$1.09 billion (AU$796 million) with operating cash flows down 5.8% to AU$1.02 billion (AU$744.9 million), however Aristocrat noted it retained almost AU$2 billion of liquidity as of 30 September 2020.

Aristocrat’s reported, as opposed to normalized, FY20 results saw net profit after tax increase 78.2% year-on-year to AU$1.50 billion but included an AU$1.1 billion (US$803.3 million) deferred tax asset, the company said.

“In May, we said that Aristocrat entered the COVID-19 challenge in good shape. Six months on, and notwithstanding the uncertainties that remain, we believe we’re well placed to emerge from this period in even better shape,” said Aristocrat CEO and Managing Director, Trevor Croker.

“Our results for the full year demonstrate that we have enhanced our financial fundamentals and further accelerated our underlying operational momentum, despite the exceptional challenges and volatility generated by COVID-19 on our business, customers, players and people across the majority of the period.

“Aristocrat continued to take share and maintained its leadership of key Gaming markets and segments over the full year, with an increased focus on customer service and engagement. Continued investment in new hardware and games delivered superior operational performance and supported resilient demand.

“Aristocrat Digital delivered exceptional operational performance, while continuing to diversify and strengthen its portfolio and pipeline of new games. Aggressive and dynamic investment in User Acquisition supported momentum and allowed the business to fully leverage COVID-19 related tailwinds, while taking further significant strides forward in organizational scale, capability and effectiveness.

“A strong balance sheet, ample liquidity and robust cash flows provide us with full optionality to continue to invest behind our refined growth strategy and take advantage of acceleration opportunities in the period ahead.”

Aristocrat has declared a dividend AU$0.10 per share, totaling dividend payments of AU$63.9 million (US$46.7 million), down 82% on the 2019 full year dividend of AU$0.46 per share.

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