Aristocrat Leisure Ltd shares plunged nearly 40 per cent today, after the world's second biggest slot machine maker warned it would post a loss and slash its dividend in the first half of 2003.
The company said it now expects to post a net loss of between $32 million and $37 million for the six months to June 30, not the break-even interim result flagged at its annual general meeting last month. Aristocrat blamed sluggish Australian sales on smoking bans in Victorian gaming venues, a general economic downturn and a decline in tourism because of SARS and other global security concerns.
As well, some $41.8 million in one-off expenses and $15 million in other provisions for its troubled South American business were expected to contribute to the company's first reported loss since listing in 1996. "It hurts all of us," acting chief executive David Creary told reporters. "But ... we've now put it behind us, we've made a true assessment of where we are and an accurate assessment of where we're heading."
The revised first half forecast, which compares to a $42 million interim net profit in 2002, did not include provisions for payments to former chief executive Des Randall and former chief financial officer Lionel Jeyaraj, who left the company last month. Mr Randall is believed to want a severance package of about $13 million.
The company had told its AGM it expected to maintain its 12-cent annual dividend for 2003 but today it foreshadowed an interim payout at a "reduced level" to last year's 5.5 cents.
Mr Creary, appointed to the temporary role following Mr Randall's departure, added he was confident of a "very profitable" second half, which would hopefully be reflected in the final dividend.
Aristocrat shares returned from a trading halt to plummet 64 cents or 39 per cent to $1.00, the stock's lowest close since September 1998. More than $290 million was wiped from the company's market value as 55.23 million shares traded today. Ausbil Dexia equities director Paul Xiradis said a profit downgrade had been expected. "But the extent of the downgrade was much more severe than expected," he said.
"There's some major credibility issues this company is facing at the moment and they need to come clean." The Australian Shareholders' Association called on Aristocrat to state categorically that it would not appoint Mr Creary to the role permanently, since he was part of Mr Randall's management team.
"Mr Creary ... should not be allowed a role in the business other than in a caretaker capacity," the lobby group said. "He should resign at the earliest opportunity." Mr Creary would not say if he wanted to take over the role permanently. "It's for others to judge our commitment and our performance," he said.
Aristocrat said it expected to update the market on its search for a new chief executive and chief financial officer, as well as three new non-executive directors, by the end of June. The ASA also called on Aristocrat to evict Mr Randall from his company-owned home in the Sydney beachside suburb of Balmoral.
"In relation to previous management ... all those matters are being attended to by our chairman and the board of directors and I'm sorry I can't comment on those matters," Mr Creary said. The ASA said it would ask the Australian Securities and Investments Commission to investigate Aristocrat's accounting treatment and disclosure of overseas transactions.
Source:
SMH
