Aristocrat concedes that the Australian gaming industry is the most competitive of the markets in which it operates worldwide, forcing it to lift its performance against four rivals.
Shares in the poker machine maker surged as much as 9 per cent on Wednesday after it posted an 11 per cent rise in first-half net profit to almost $53 million and raised its dividend. Revenue fell nearly 8 per cent to $383 million due to a weak performance in Japan, one of its largest markets outside Australia and the US.
Pre-tax earnings from its Japanese business dropped 9 per cent because it released just one game in the half, compared with two before.
Profits in Australia and New Zealand - its second-biggest market - fell almost 7 per cent to $40 million due to the impact of regulatory changes in Victoria. But Aristocrat's operations in North America posted a 13 per cent profit rise to $US69 million.
Chief executive Jamie Odell said Australia was "absolutely the most competitive market at the moment", with the company facing strong competitors.
"We have seen improved performance in our games across New South Wales and Queensland, but I would still describe this as
the most competitive marketplace," he said. "The years of incumbency are now being challenged by good-quality competitors, and that is keeping us on our toes and has driven our strategy to move into further segments."
Mr Odell said the solution in Australia was not just to produce better Aristocrat games, but to introduce content from such game designers as Daniel Marks.
Aristocrat will pay an interim dividend of 7¢ a share on June 28, up from 4¢ previously. The company plans to return more money to shareholders by raising its target payout ratio to 80 per cent of net profit, from 60 per cent previously.
Mr Odell said the board preferred to increase the payout ratio rather than opt for a share buyback.
Aristocrat expects net profit in the second half to be similar to those in the first six months.
Michael Pascoe— Page 30