Ainsworth Game Technology to launch new products as it looks to offset revenue slump
The poker machine maker will launch several new games in the coming months as it look for new ways to increase revenue amid strong competition in Australia and struggles in Argentina.
Poker machine maker Ainsworth Game Technology will develop and release new products to drive additional revenue and profitability after the ASX-listed group suffered from increased competition in Australia.
Its underlying profit after tax dropped 22 per cent to $12.7m for the six months to June 30, with revenue down 15 per cent to $121.4m, as it was also impacted by Latin America, particularly in Argentina where it suffered regulatory and inflation woes.
Research and development expenses jumped 18 per cent over the six months from a year earlier, and accounted for 21 per cent of total revenue as Ainsworth focused on development investment to produce competitive and innovative products in a move to outcompete rival providers.
It is expected that a consistent level of investment in R&D will be maintained in the second half which includes expansion of the recently created studio in Monterrey in Mexico and established development studios in Sydney, Las Vegas, Austin and Reno.
Ainsworth chief executive Harald Neumann says management continued to pursue and implement measures focusing on technology, development, and culture to improve product performance and increase revenue opportunities as well as attract development talent.
“As we secure the remaining approvals of the A-Star Raptor across additional jurisdictions in conjunction with the progressive release of newly developed gaming titles we expect the second half to provide increased revenue opportunities,” he said.
“The investments we have made, underpin our commitment to our stakeholders, ensuring upgrades in technology and hardware, while maintaining the momentum of improving game performance to ensure long-term sustained success.”
Mr Neumann said the company had a constant need to develop and roll out products to meet market expectations. It comes after it secured new business with Fountain Blue, Caesars, Stations Casinos and Wynn.
“Every quarter you need new games to keep up with the operators, because each operator is buying maybe two to four games, but then you have to provide them with additional games. We have much planned for next year, and for the second half to improve our sales,” he said.
Underlying earnings fell 8.8 per cent to $26.8m. Profit before tax, excluding currency impacts and one-off items, dropped 39 per cent to $14.3m.
Argentina proved tough for Ainsworth, due to issues securing import licenses and resultant sales not repeated in the first half. Mr Neumann said inflation, which had slowed from 292.2 per cent in April to 263.4 per cent in July, was another challenge for the group.
“We are invoicing our machines in pesos and US dollars, but get paid in pesos and based on this inflation we decided to stop the sales to Argentina in comparison to last year,” he said.
“Mexico had another impact where no imports were approved by the government, which changed in July.”
Mr Neumann said it remained committed to Latin America despite market and economic conditions and would explore opportunities while it navigated the recent hurdles.
Ainsworth’s Asia Pacific performance was impacted by competitive market conditions, which saw revenue reduce by 10.2 per cent to $19.1m. The region sold 553 new unit sales despite tough conditions
North America had flat revenue at $67.9m as machines under operation stayed around 3030. Additional new placement opportunities within Kansas and Texas are expected following the introduction of legislation, as well as expansions in Alabama, New Hampshire, Wyoming and Kentucky.
It has also agreed to an extension of its exclusivity agreement for a further three year term for VLT products within Montana, which will also see the purchase of 75 Bear Elite cabinets.
Shares in Ainsworth rose 2.1 per cent to 88c on Wednesday, reducing losses since January to 34 per cent.
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