Australian stock exchange investors reacted negatively Friday when online and land gambling games and equipment supplier Ainsworth Game Technology Limited released a trading update that included a warning that profit in the second half of the current year is likely to be less than half of its prior guidance.
Shares in the company plunged 37 percent on the news that Ainsworth now expects profit before tax to be about A$20 million, well short of the company’s February guidance of A$42.2 million for the period.
Management has placed the blame on its domestic sales being adversely affected by factors including competitive activity, regulatory approval delays in product submissions, and delays to scheduled key game releases until the first-half of FY 2019, along with lower Latin America sales due to a preference for second-hand gaming machines, and North American profits hit by the strong growth of its low margin PacMan product.
Profit before tax for the full year FY18 is now expected to be approximately A$36 million compared to the A$57.4 million in FY17, with CEO Danny Gladstone commenting:
“We are clearly very disappointed by the rebasing of our profit expectations for 2HFY18. We operate in competitive markets and our execution this time has not met the high standards our shareholders correctly deserve.
“We are moving decisively to improve our profit outlook and are continuing to progress new product developments and marketing initiatives, which we confidently expect to improve our performance in FY19.”