Aristocrat aims for September reopen after suffering profit hit from coronavirus pandemic

Poker machine maker Aristocrat is forecasting it will reopen all its gaming venues by September.

Poker machines are no-go zones in the pandemic.

Poker machine maker Aristocrat is forecasting it will reopen all its gaming venues by September after suffering a 60 per cent revenue wipe-out in April as the Len Ainsworth-backed company battles coronavirus.

Chief executive and managing director Trevor Croker said the company had enrolled in the Morrison government’s $130bn JobKeeper scheme after the mass shuttering of pubs, clubs, casinos and other gaming venues had powered down Aristocrat’s entire land-based business.

But Mr Croker said the company had the financial strength to emerge from the COVID-19 pandemic, with $1.8bn of liquidity available.

“For the whole month of April our land-based business, which is 60 per cent of our revenue, we didn’t have any revenue because there was only a handful of casinos open around the world,” Mr Croker told The Australian from Las Vegas.

“So April was a tough month from a land-based point of view”.

As a result of coronavirus, Aristocrat has stood down 1000 staff from May 1 to the end of the June and has made an additional 200 roles redundant. It has also suspended its interim dividend – which was 22c for the same period last year – to further strengthen its balance sheet.

But green shoots are emerging in its digital business, which generated $698m in bookings in the six months to March 31. Mr Croker reported a 20 per cent in uplift in April, likening it to increased Netflix consumption as people adjust to life in lockdown.

“We have seen an increase in the consumption of our digital products across all of the genres, so social casual, social casino … the bookings have increased about 20 per cent April over March.

“Generally, across the world social gaming has gone up by about that. China went up probably more than that when they had their first lockdown very early in the pandemic.

“But I’d also say things like Netflix has gone up, with subscriptions going up at the same time as have a lot of subscription entertainment services.”

Overall, net profit fell to $305.9m in the six months to March 31 from $356.5m the previous corresponding period. Meanwhile revenue rose 7 per cent to $2.252bn.

Aristocrat’s shares slumped 3.5 per cent to $29.39 in afternoon trade on Thursday amid a flat broader share market.

Subject to government and regulatory authorities in each of the jurisdictions it operates, Aristocrat is expecting all of its customers to reopen their gaming venues by September, with the Northern Territory first off the rank starting to ease restrictions this month.

Elsewhere in Australia, its 5000 venue customers in NSW, Victoria and Queensland are expected to open by July. Meanwhile most of its 989 US venue customers are tipped to open again by next month, and its 1000 customers in Europe, the Middle East and Africa may not open until September.

“That’s just our expectations. Each one of those jurisdictions requires government and regulators to approve various stages and as you know Australia still has got a somewhat ambiguous position as to where they are going to sit in terms of casinos.

“The other part to this is it’s going to be a phased approach. Just because they are able to open, doesn’t mean the will open consistently. They will open with social distancing, reduced trading hours and face some other challenges to ensure consumers feel safe and secure.”

In Las Vegas, Mr Croker said he could see the lights of The Strip from his hotel room but there was hardly anybody in the street, which is usually filled with punters milling around sipping super-sized cocktails and hawkers flicking shiny little escort ads on any man in their path.

“I can look out my window and see The Strip and lots of lights on but I know there aren’t many people there. The Strip is still closed down the (Nevada) state as a whole hasn’t opened any of its gaming venues.

“This is a destination based area where a lot of people come for the entertainment, the shows and the gaming, and the parties … but there isn’t a lot of people here at the moment and that’s going to take some time to recover.”

Overall, Mr Croker praised the general response of governments, particularly Australia’s, to limit the spread of the pandemic.

“None of us had a playbook for this scenario and there have been decisions that have to be made and often they’re very quick decisions.

“But I think governments have reacted appropriately across the world. Some have reacted more faster and more swiftly, some have been more severe and some have been more casual and reactive.

“I think Australia has done a good job in responding. But it is a market by market position.”

Pre-coronavirus outbreak, Mr Croker said Aristocrat average fee per day increased 0.3 per cent to $US50.20.

“Aristocrat delivered a result for the half year to 31 March 2020 that demonstrates our core strengths and the relevance of our product-led strategy, despite the unprecedented challenges generated by the COVID-19 pandemic,” Mr Croker said.

“Our progress in driving share through outstanding product and diversifying revenue streams – including across attractive digital genres and titles – are also evident in this result.”