Ainsworth Game Technology has had a difficult time recently, even before COVID-19 came in and screwed everything up. The Australia-based gaming equipment supplier reported a significant drop – 22% in its revenue in the Asian region in October of last year, and the problems have only been exacerbated by the continued threat of the coronavirus. It just provided an update on its financial health during the most recent fiscal year, which concluded on June 30, and things haven’t improved. The numbers are way off from where they should be, which has forced Ainsworth to announce that it has suspended dividend payments.
For the 12-month period, Ainsworth saw a loss of $31.5 million, a stark contrast to the US$7.96 million in profit it reported for the previous fiscal year. Revenue for the company was off by 36.2% year-on-year, making this the catalyst of the decline. In the previous fiscal year, Ainsworth took in $170.82 million, but could only reach $108.92 million this time around. The company acknowledges the role COVID-19 played in the declines, explaining in a filing with the Australian Securities Exchange, “These results were severely impacted by Covid-19, primarily in quarter four, traditionally the strongest period for the group. Customers across all of our major markets suspended their operations from mid-March.”
EBITDA (earnings before interest, taxes, depreciation and amortization) dropped into the red, reported at $6.56 million. Looking back a year, Ainsworth’s EBITDA had been a solid $32.64 million, driving home the difference in performance between the two periods. As the coronavirus threat lingers in different parts of the world, even as talk of a vaccine is being heard, the recovery process won’t be an easy one.
Ainsworth is confident, however, that it will be able to bounce back, especially as casino operators start to get back into their routines. The company explained in the filing, “Encouragingly, some [casino-operator] customers’ facilities have started to reopen, although the majority of venues have indicated initial reductions in capital expenditure due to travel restrictions imposed and resultant impact” on visitor volumes, which were “well below pre-pandemic levels.” CEO Lawrence Levy chimed in, adding, “While the Covid-19 pandemic hit our industry hard, we moved quickly to protect Ainsworth.”
In order to try and prevent further losses, Ainsworth has implemented, and continues to implement, a number of measures designed to cut expenses. Unfortunately for many, these cuts cross over into the employment area and there are voluntary reductions in salaries, as well as the elimination of 107 jobs. The latter is expected to save the company around $7.28 million, which it asserts will be enough to carry it for the better part of the current fiscal year.
