Australian veteran gaming machine manufacturer Ainsworth Game Technology recently provided a rather pessimistic financial forecast. The company expects a significant decline in pre-tax profits for the second half of the year, directly "halved" to 7.6 million Australian dollars, which is in stark contrast to the 13.9 million Australian dollars achieved in the first half of the year. Despite the support from the Asia-Pacific and Latin America markets, a "Waterloo" in the key North American market has cast a shadow over the company's overall performance.
Overall Finance: Significant pressure on performance in the second half
According to Ainsworth's latest expectations, the pre-tax profit for the fiscal year 2025 is expected to be 21.5 million Australian dollars, slightly down from the previous fiscal year's 23.2 million Australian dollars. Total revenue for the year is expected to grow by 9%, but this is mainly due to strong performance in the first half. Once entering the second half, revenue is expected to fall by 11% compared to the first half's 152.1 million Australian dollars. The company admits that this is mainly due to weak sales in key markets.
Regional Markets: A Tale of Two Extremes
The performance of different markets is vastly different. The Asia-Pacific region (APAC) has managed to maintain its momentum, thanks to the successful launch of its new A-Star Raptor gaming cabinet at the beginning of the year. The Latin American (LATAM) market also performed steadily, with a slight increase in revenue. However, North America, as a "key market," might be "dragging its feet". The company expects revenue in the North American market to decline by about 20% year-over-year in the second half. This is mainly because the concentrated sales of Video Lottery Terminals (VLTs) in the first half did not recur in the second half, and participatory income also declined due to a reduction in terminal installations and a decrease in daily average revenue per terminal. According to PASA's official website observation of the global hardware market, such single-market fluctuations are becoming increasingly common in affecting manufacturers' cyclical performance.
Inventory and Funds: The Chain Reaction of Slowing Sales
The slowdown in product sales has directly led to an accumulation of inventory. Ainsworth states that reduced sales in the second half have led to an increase in inventory levels. To cope with this short-term operational capital requirement, the company had to utilize its bank loan facility with Western Alliance Bancorporation. This also indirectly reflects that, even with the markets in Asia-Pacific and Latin America "holding steady," manufacturers' cash flows are still being tested during market demand fluctuations.
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