Aristocrat Leisure Sees 73.5% Drop in Half-Year Profit

Aristocrat Leisure is Australia’s biggest manufacturer of gaming products and pokies, but even it is not immune to the effects of the COVID-19 pandemic. Aristocrat reported a massive fall in half-year profit, although it still made $346.5 million after-tax.

Half-year profit after tax slumped an incredible 73.5 per cent to $346.5 million. This was for the six months up to March 31, 2021. The previous reporting period saw Aristocrat log a half-year profit after tax of $1.305 billion.

The company’s Chief Executive Officer and Managing Director, Trevor Croker, is delighted with Aristocrat’s performance despite the reduction in half-year profit.

“The outstanding momentum we’ve delivered this half reflects our unwavering focus on the things we can control, which lies at the heart of our proven growth strategy. Despite the uncertainties driven by COVID-19, we have maintained investment in the best people, talent, technology and product portfolios and taken conscious decision to accelerate the implementation of our strategy.

“The results are reflected in the share growth and margin expansion achieved across Digital and key Gaming segments in the six months to 31 March 2021, and the double-digit increase in normalised Group NPATA delivered in the same period.”

“We expect uncertain and volatile conditions to continue near term, and we are closely monitoring key factors including consumer sentiment and Gaming venue patronage. Nevertheless, we enter the second half of fiscal 2021 with excellent momentum, resilience, and confidence with a strong balance sheet to continue to invest organically to grow share and accelerate growth through M&A in line with our rigorous criteria.”

Half-Year Profit Plummets But Future Looks Bright

The future looks bright for Aristocrat despite the vast fall in half-year profit after tax. The company still managed to pad its coffers with almost $350 million despite difficult trading conditions.

It reduced costs by standing down 1,000 employees during the height of the pandemic. Aristocrat cut 200 jobs and swapped an additional 200 full-time roles to part-time.

Furthermore, Aristocrat’s online division performed exceptionally well. Player purchases for online activities soared 28.9 per cent, with lockdowns forcing people to stay at home. There were increases across the board, from casino-style games to role-playing games and puzzles.

Revenue from the company’s digital arm increased 28.8 per cent to $895.8 million. Aristocrat spent $242.7 million on game design, which helped to keep half-year profit buoyant. That is the equivalent to almost 11 per cent of the company’s revenue.

Overall group revenue only fell one per cent to $2.23 billion. The Aristocrat Leisure management team runs a tight ship.

Aristocrat Essentially Has Licence to Print Money

Half-year profit may be down, but Aristocrat still made a huge lump sum of almost $350 million. This was achieved because the company has what is essentially a licence to print money.

Aristocrat’s last full-year financial figure revealed how much money they can make. It makes the majority of its money through renting pokies to casinos. Those rents weigh in at an average of $78.77 per machine per day in the United States alone. Aristocrat has 50,554 devices in the United States. Multiply the number of machines by the average rent, and you come to $3,982,138.58 each and every day.

Of course, most of the United States casinos have been locked down for long periods over the past 12 months. The half-year profit report reflects this. A fall of 87 per cent in operational machines resulted in a US$9.5 million loss ($12.32 million).

Casinos around the world are slowly but surely reopening, which is excellent news for Aristocrat. Its subsequent half-year profit should return to previous levels, pleasing investors.

Those investors reacted positively to the financial figures, with shares in Aristocrat increasing from $40.67 to $41.91.