in turnover weighs on Aristocrat, by Vanda Carson
- 8th May 2008
The Sydney Morning Herald)
Poker machine maker Aristocrat
Leisure yesterday gave details of the extent of
its sales decline in the US and warned of an oversupply
of machines in its other important market, Macau.
also gave an insight into a distressing trend
where their casino customers were holding onto
their outdated machines for three times longer
than ever before, a move which has crimped sales
of replacement machines.
surge of bad news delivered by Aristocrat chief
executive Paul Oneile at a conference hosted by
Macquarie Bank resulted in company's shares closing
3.5 per cent lower yesterday. They finished 26c
lower at $7.14.
share price has fallen on all but one day since
Mr Oneile issued an effective profit warning last
Oneile said on April 29 that he expected 2008
would be the fourth consecutive year of relatively
flat profit growth.
blamed the US economic decline on a reduced appetite
for gambling, saying sales to its biggest market
this calendar year would be down by more than
20 per cent on expectations.
Oneile said the company now expected to sell 75,000
machines to the US market this year, compared
to previous estimates of between 90,000 and 95,000.
of the sales slump is due to casinos keeping old
machines in service for longer than before, even
though in the past they would have been considered
well past their use-by date.
sales are expected to be down by a third on previous
said US customers usually replace their machines
every five to seven years, but they were now waiting
up to 16 years before upgrading to new stock.
was also happening in Australia, where for the
past three years replacement orders have been
at similarly low levels.
under half of the total sales to the US are to
either new casinos or to venues which are increasing
their gambling capacity after regulators approved
an expansion. Mr Oneile said the problems were
not limited to the US.
in the former Portuguese enclave of Macau - now
the world's biggest gambling zone - had over-ordered
poker machines and they were now lying dormant
reason they were not being put to work was that
visitor numbers and spending were not high enough
to justify their use.
Oneile said visitor numbers and the amount they
were putting through machines in Macau were still
growing, so it would not be long before the warehoused
machines would go into service.