Aristocrat Leisure Ltd., the world's second-largest slot-machine maker, said second-half profit rose 4 percent as it overcame government restrictions on gambling by expanding in the United States.
The Sydney-based company said net income for the six months ended Dec. 31 rose to A$37.7 million ($20 million), or 8.9 cents a share, from the year-earlier A$36.3 million, or 8.6 cents. U.S. sales jumped 67 percent, helping offset a 3.5 percent decline in its home market.
In an excellent report from Andrew Harrison at
www.bloomberg.com he explains that, Australians are the world's biggest users of slot machines, with some 180,000 in use -- a fifth of the world market though the nation accounts for less than 0.5 percent of global population. State government regulators, alarmed at a rise in problem gambling, have put a cap on new machines, forcing Aristocrat to look to other markets to expand.
''The whole emphasis now is on the company's offshore earnings,'' said Michael Heffernan, an analyst at broker Dickson's Ltd. ''The Australian market is considered to be mature,'' he said, adding that the second-half earnings were ''good.''
Chief Executive Des Randall told journalists he expects profit to be little changed in the first half of this year, though full-year profit will exceed last year's A$65 million. Australia is second only to North America in the number of gaming machines in operation. The nation of 20 million accounted for about 80 percent of sales in calendar 2000, down from about 85 percent the previous year. Local sales probably won't rise again soon.
On Feb. 6, New South Wales Premier Bob Carr said he may extend by 12 months a freeze on new slot machines in the state's 1,600 registered clubs. His government introduced the cap on new machines last March in an effort to stem problem gambling in a state home to one in four Australians.
Three days later Victorian Premier Steve Bracks announced regional limits to 30,000 slot machines in that state, Australia's second most populous.
U.S. Expansion
Aristocrat competes with Reno, Nevada-based International Game Technology, the world's biggest slot machine maker and Chicago-based WMS Industries Inc., the third-biggest. Last month, the Australian company bought Casino Data Systems Inc. of Nevada for $180 million, a key step in its bid to expand in the world's largest gaming market.
CDS's casino management software operates in 117 casinos and its slot machines are in more than 266 casinos in North America, Randall said. Also last month, Aristocrat received approval to begin tests on its Australian-made slots in Nevada. It began selling its gaming machines in Japan this month and expects to sell up to 25,000 units this fiscal year, Randall said.
''They've done well to make those gains in the U.S. and they will go a long way in the coming year,'' said Len Ainsworth, founder and former chief executive of Aristocrat, whose family owns 47.5 percent of the company. He said it may be harder to glean profits from Japan some two dozen game machine makers compete.
As well as expanding slot machine sales overseas, the company has boosted sales of casino management software and related services. That now accounts for 43 percent of total sales, up from just 15 percent three years ago.
