LatAm struggles weigh on Ainsworth’s H1 results

Revenue for the six months to 31 December 2020 is expected to come in around AU$72m. While this would represent a 71% improvement on the second half of its 2020 fiscal year – when operations were disrupted by the novel coronavirus (Covid-19) pandemic – it also represents a 33% year-on-year decline. 

Over the reporting period Ainsworth saw its North American performance improve, with revenue from the region totalling AU$41m in H1, compared to AU$21m in the previous six month period. This again remained down year-on-year, however, with the supplier generating in AU$51m in H1 2020. 

This was driven by improved revenue from leasing and rental of its machines, which grew 10% from the prior fiscal year, while its historical horse racing (HHR) products made a positive contribution. 

Australian revenue, meanwhile, more than doubled to AU$19m, thanks to a strong performance from newly launched products.

However, Latin America continued to be adversely affected by high novel coronavirus (Covid-19) transmission rates, leading to more venue closures and restrictions. 

“Given the uncertainties and deferrals of purchasing decisions caused by the pandemic within this region, further reductions in revenues are expected in the short term before a return to pre-pandemic activity levels, impacting timing of expected cash flows,” Ainsworth said. 

As a result it expects to make a material non-cash impairment charge on its business in the region. 

While the improvement in US and Australian revenue is expected to help underlying earnings before interest, tax, depreciation and amortisation reach $6m – excluding currency translations and one-off items – the business is set to post a loss for the period. 

Ainsworth’s first half pre-tax loss is expected to come to approximately $14m, though this excludes a currency translation loss of $14m, due to the strengthening of the Australian Dollar against the US Dollar. 

The unaudited result remains subject to further review before it is finalised, with a full breakdown of first half performance expected to be released on 25 February. Audited results will then follow in March