Aristocrat Leisure reports spike in online game purchases

by William Brown Last Updated
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Gambling and gaming giant Aristocrat Leisure saw a 20 per cent rise in player purchases for online activities in the month after the coronavirus pandemic forced people to spend time at home.

The Australian Financial Review reports the rise was “across the board” in Aristocrat’s offerings from casino-style games to puzzles and role-playing games.

It came as Aristocrat said the pandemic had battered sales of physical gaming machines with orders typically coming at the end of the March quarter.

Fees on other Aristocrat machines placed in casinos and other venues were also trimmed as facilities were shut down and people avoided crowds.

The company’s statutory profit for the six months to March jumped from $346 million to $1.3 billion, which was boosted by recognition of a $1 billion deferred tax asset.

But on Aristocrat’s preferred measure of normalised profit after tax and before amortisation of acquired intangibles (NPATA), earnings were down from $422.3 million to $368.1 million.

That was despite revenue rising seven per cent to $2.25 billion, in which digital revenues grew 19 per cent and offset a drop in money earned from physical machines.

The underlying fall in earnings was far worse than market estimates, with Citigroup analysts led by Bryan Raymond saying the surprise came from factors including weak machine sales in the US, poor Australian earnings and higher levels of doubtful debts.

Shares in the gaming outfit fell $1.37 to $25.97 on Thursday.

Casinos shut and workers stood down

The pandemic has squeezed gambling-linked enterprises across the globe, with casinos shut down for fear of spreading infection.

In Australia, operator Crown Resorts has stood down 11,500 people and The Star Entertainment Group 8500.

Aristocrat has felt the impact, including with its US operations.

It has stood down 1000 staff, cut 200 jobs and transformed another 200 full-time positions to part-time roles.

The major hit was in its physical, or “land-based” segment, with the division’s profits in the US down 18.9 per cent to US$303 million (A$461 million).

Volumes of machine sales were down 29 per cent; Aristocrat said that partly reflected the previous corresponding period having a jump in sales, but also the pandemic in the latest period disrupting purchasing decisions.

Profits in Australia and New Zealand tumbled 29 per cent to $77 million, which it said partly reflected product mix and provisioning increases for bad debts linked to the pandemic.

Other regions were down 26.4 per cent to $31.3 million.

Aristocrat chief executive Trevor Croker, speaking from Las Vegas, said venues in Australia and the US were tipped to reopen between May and July.

About half of tribal properties – where he described Aristocrat as having a strong presence – in Oklahoma were tipped to open by May’s end. In Nevada, venues were planning phased openings through to June.

But Mr Croker did not provide profit guidance and said “there’s still acute uncertainty” with how casinos would reopen.

“There’s less than 100 casinos that have opened,” he said.

Casinos were also planning infection counter-measures such as reducing occupancy, social distancing and sanitary measures.

Aristocrat reported a bump from its digital division.

Though not online gambling per se, it provides entertainment from casino-themed games such as Vegas Penny Slots or adventure games such as RAID: Shadow Legends.

Players can make in-game purchases and these rose 19 per cent to US$696.7 million.

The margins in the digital division are far less than with physical machines, but profits still rose 12.4 per cent to US$197.6 million.

The purchases jumped 20 per cent in April compared to March, according to Mr Croker.

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