http://au.biz.yahoo.com//050221/30/3fqa.html

Tuesday May 3, 10:05 AM

Aristocrat expects $90m net profit

Poker machine maker Aristocrat Leisure Ltd expects net profit of $90 million to $100 million in the first six months of the year, a record result for the company.

Speaking at the company's annual general meeting, managing director Paul Oneile said the outlook includes assumptions of continued success in North America and Japan and the timing of product approvals from regulators.

"Based on preliminary, unaudited year-to-date management results and current trading momentum, the company expects to report a half year profit after tax in the range of $90 million - $100 million," Mr Oneile said.

"This represents an improvement of approximately 50 per cent on the $63.3 million reported for the corresponding period in 2004."

Mr Oneile added that while overall trading continued to be strong, conditions were mixed in key markets, with the Australian market experiencing a slow replacement cycle for gaming machines.

He said the North American operations are generating strong game sales volumes.

"We are seeing a continued momentum with strong game sales volumes, a further increase in the installed base of recurring revenue units and higher average revenue per day," Mr Oneile said.

He added that the company was about to start delivery of its Streetfighter 2 game to Japan in June and that this should help drive second half earnings.

"We remain confident about the overall Japanese results for the full year," Mr Oneile said.

"However, we do not intend releasing another game until well into the second half of the year, consequently the bulk of our total sales for this year will come into that half."

Mr Oneile added that while Australia and New Zealand would continue to be key markets, the contribution as a percentage of earnings will narrow going forward.

"Australia and New Zealand will remain significant contributors to the overall group," Mr Oneile said.

"Whilst we expect longer term growth in the profitability of both these markets, their percentage contribution to the group overall will decline as our international operations grow."

He said that North America was a key market for the company, while it has also been demonstrated that the model is sustainable in Japan.

Mr Oneile said that while global gaming was still in its relative infancy, the company was ready to enter new markets as they develop.

"We are already seeing heightened activity in the Asian region," he said.

"In Europe, Russia is a key market and there are positive signs from other eastern European countries.

"We will focus on establishing significant positions in each of these developing markets as they emerge."