Aristocrat Leisure Sees Profits Plummet by 46.7%

Aristocrat Leisure reported its latest financial figures and they make sorry reading indeed. The figures reported show profits fell by 46.7% for the year ended September 30, 2020.

The Australian company is one of the world’s largest producers of land-based pokies. It makes the majority of its money from renting its pokies to casinos. Those rents weigh in at an average of $78.77 per machine per day in the USA. This doesn’t sound much but Aristocrat Leisure has 48,000 machines in the United States alone.

Group revenue fell 5.9% to $4.139 billion as a result of COVID-19 related shutdowns around the world. A company’s revenue drives other financial measurements, especially profit. That figure dropped like a stone compared to FY2019.

Total profit weighed in at $476.6 million down 46.7% from the $894.4 million of 2019. That is a massive reduction in profit.

The figures would have been far gloomier had it not been for excellent digital results. Aristocrat Leisure Digital provides online pokies around the world. Business is booming in this sector with revenue increasing an impressive 31%. That is $1.174 billion in monetary terms.

Aristocrat Leisure stood down 1,000 staff from April until June 2020 to keep costs low. An additional 1,500 staff had their salaries reduced. Board members and Trevor Kroker, the CEO, took 30% wage cuts.

Aristocrat Leisure CEO Remains Positive

The Aristocrat Leisure CEO remains upbeat and positive about the road ahead. The company profits may have fallen by 46.7% yet they still weighed in at $476.6 million despite the global pandemic. CEO Trevor Kroker addressed shareholders in a statement.

“The resilience and commitment of Aristocrat’s global team of over 6,000 people has been impressive, particularly over the last 10 months. I want to thank all of our people for the care they have shown for each other, their focus on our customers and players, and their absolute determination to deliver despite the challenging circumstances. Their safety and wellbeing – and the safety and wellbeing of our customers, suppliers and other stakeholders – remains Aristocrat’s first priority.”

“We said in May that Aristocrat Leisure entered the COVID-19 challenge in good shape. Six months on, notwithstanding the uncertainties that remain, we believe we’re well placed to emerge from this period in even better shape. Our results for the full year to 30 September 2020 demonstrate that we have enhanced our financial fundamentals and further accelerated our underlying operational momentum, despite exceptional challenges and volatility generated by COVID-19 on our business, customers, players and people across the majority of the world.”

Kroker singled out the company’s digital division for its “exceptional performance.” He also revealed net debt fell 29.5% to $1.567 billion, down from $2.223 billion.

Shareholders Experiencing a Bumpy Ride

Shares in Aristocrat Leisure remained relatively steady after the ASX announcement, closing at $33.31. They dropped to $32.37 in the early trading hours before rallying to $34.70 on November 18. They’ve since settled to $34.59.

Investors have endured a bumpy ride during 2020 so far despite the share price being almost identical. The share price plummeted in March to $15.31. Prime Minister Scott Morrison forcing casinos to close in Australia was partly responsible. Other casinos around the world also closed.

Those shares have climbed slowly but surely back to their original starting point.

Smart investors realise Aristocrat Leisure is a sound security for future growth. It is at the forefront of technology and has revenue streams around the world. It is popular in the massive U.S. market and continues signing contracts with major players.

Boyd Gaming Corporation is one such partner. Boyd and Aristocrat joined forces in October to launch the latter’s cashless wagering digital wallet in Indiana. The system allows customers to place cash on account and use their loyalty card for chips on the casino floor.