Ainsworth Game Technology's poker machine sales in Australia have slumped by almost 30 per cent, and the company says its half year pre-tax profit will more than halve.
Ainsworth's shares dived in the wake of the news, losing 21 cents, or 10.4 per cent, to close at $1.81, after earlier hitting a low of $1.60.
Ainsworth said competition in Australia and a reduced level of purchasing by gaming operators and casinos had resulted in sales since July 1 dropping about 30 per cent compared to a year ago.
"The trends affecting the company's sales in domestic markets in the second half of 2016 have continued into the new financial year," the company said.
Pre-tax profit in the six months to December 31, excluding foreign exchange movements, is expected to be about $15 million, down from $35 million in the prior corresponding period.
Ainsworth said its half year financial results would also reflect greater spending in research and development to build a pipeline of new products to boost future performance.
The company's full year result is expected to depend more on performance in the second half of the financial year, given the historical seasonality of sales in the North American market, where it generates more than two thirds of its profit.
Ainsworth said its pre-tax profit in the second half of the financial year is expected to be significantly better than the result a year earlier.
Customers in the Americas had responded positively to Ainsworth's new A600 poker machine launched at the Global Gaming Expo in Las Vegas in September, it said.
Sales of the newly released A640 poker machine are also expected to make a positive contribution to the second half results.
Ainsworth said it is confident that research and development activities, and the company's relationship with international gaming firm Novomatic AG, would produce new products to strengthen interest among Australian customers.
