High costs hit Aristocrat profits
High costs and difficult market conditions blamed for drop in profits after overall revenue increase.
Australian software supplier Aristocrat Leisure has posted a 14% drop in profits in its results for the year ending 31 December 2011, with high costs cancelling out rises in revenue and gross profit.
Revenues for 2011 were up 5% from $681m to $704m, pushing gross profit from $365m to $385m. This was offset however by higher costs, with administration costs up 36% to $108m and finance outgoings rising to $28m, despite reductions in design and development and sales and marketing expenditure, which resulted in total profit for the year dropping 14% from $78m to $67m.
While North American revenues grew 5% year-on-year to £312.8m, total profit for the region fell 4%, with difficult market and operator trading conditions blamed for the decline. The company saw a similar outcome in Latin America where, despite revenues rising 21% from $25m to $30m, profit fell 20% to $7.6m, down from $9.5m in 2010.
The company’s Australian operations posted stronger results, with a 27% increase in revenue leading to a 175% increase in profit, up to $64m from $23m, attributed to higher sales, focused cost management and improved game performance, with 86 titles launched in the country over the course of the year.
Aristocrat has applied for a manufacturer, distributor and service provider licence in Nevada, and has agreed deals with software providers OpenBet and Amaya. The OpenBet deal, signed in January, will see the sportsbook supplier add a number of Aristocrat’s games to its games suite, while Amaya will make a selection of Aristocrat’s products available online and through video lottery terminals.
This follows the launch of Aristocrat’s free-play casino offering, developed in conjunction with GameAccount Network, at the Island Resort & Casino in Harris, Michigan and the Maryland Live! Casino in Arundel Mills, Maryland.