Slot-machine manufacturer Ainsworth Game Technology Ltd has warned that it expects a year-on-year decline in revenue and profit for the first six months of the 2019 financial year through 31 December 2018 due to challenges in its domestic Australian market.
Providing a trading update in an ASX filing on Friday, Ainsworth said it anticipates a 29.2% fall in profit before tax from AU$11.3 million in 1H18 to around AU$8 million in 1H19, explaining that “highly competitive conditions in the Australian market are continuing in FY19.”
As such, “revenues and profit before tax for the Australian segment are expected to be materially lower for 1H19 compared to the 1H18.
“Overall industry demand has fallen by around 10%,” the company said. “Furthermore, timing issues around the approval of more complex new products and the strategic decision to defer product launches into 2H19 to maximize market impact and total returns have affected short term financial results.”
On a more positive note, Ainsworth said it is expecting significant year-on-year improvement in 2H19, excluding the benefit gained earlier this year from the sales of 900 units to Churchill Downs Incorporated in the US and 800 kits to Novomatic. The current estimate is for an increase of at least 75% on the AU$8 million it is estimating for the current half.
“While Ainsworth continues to make progress in driving growth in the key Americas markets, our performance in the highly challenging domestic markets is adversely impacting our overall results,” said CEO Danny Gladstone.
“With our investments in technology and increased R&D, and the release of newly developed gaming products, we expect to deliver improved results in both domestic and international markets in the second half of the year compared to 1H19.”