Ainsworth expands US presence

Poker machines supplier Ainsworth is expanding its presence in the key US market but is also warning that pre-tax profit will be flat.

A man playing a poker machine

Poker machines supplier Ainsworth is set to double the number of machines it has in the US market. (AAP)

Poker machines supplier Ainsworth Game Technology is set to double the number of machines it has under operation for fees in the lucrative US market.

Ainsworth is spending $US38 million ($A53.56 million) to acquire US-based Nova Technologies, which has 1,300 poker machines earning a daily fee installed across 11 states.

The deal will lift the number of poker machines that Ainsworth has under gaming operation on daily fees in North America to more than 2,600.

"This is an accretive acquisition and highly complementary addition to our North American business," executive chairman Len Ainsworth said on Tuesday.

News of the deal came as Ainsworth warned of a flat first half profit, sending the company's shares lower.

Ainsworth described Nova as a leading provider of Class II systems - or video lottery terminals, with game titles including Dragon's Heat, Enchanted Princess, Immortal Nights, Gorilla Diamond and China Gold.

Its machines are connected to a centralised computer system that determines the outcome of each wager.

The US market has 56,000 Class II poker machines installed.

"The transaction allows us to enter Class II gaming in an immediate and significant manner," Ainsworth chief executive Danny Gladstone said.

Ainsworth expects Class II to remain a stable to growing market segment, given the favourable tax treatment for such machines at casinos run by native Americans.

Ainsworth's other initiatives in North America include building a new manufacturing, research and sales facility in Las Vegas, which is expected to open in the second half of fiscal 2016.

Meanwhile, Ainsworth warned shareholders at its annual general meeting that pre-tax profit for the first half of fiscal 2016 is likely to be flat.

Mr Gladstone said Ainsworth expects continued strong revenue growth for the first half and full year, driven by good growth in international markets and market share gains in Australia.

But margins may decline temporarily as the lower Australian dollar inflates the cost of components used in gaming machines.

Increased investments to drive growth, primarily in the Americas, will also affect pre-tax profit.

Mt Gladstone said margins are expected to recover on the back of more-efficient production, cost cuts and greater production volumes of the new technologically-advanced A600 wide-screen cabinet.

Shares in Ainsworth fell 20 cents, or 6.45 per cent, to $2.90.


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Source: AAP



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