Aristocrat Leisure Limited Achieves Robust FY24 Results and Strategic Divestment
ALL (ALL) Share Update November 2024 Tuesday 12th
Aristocrat Leisure Limited Reports Strong FY24 Results with Strategic Divestment
Aristocrat Leisure Limited has released its full-year 2024 results, showcasing impressive financial growth and strategic moves to streamline its portfolio.
Instant Summary:
- 20% growth in Earnings Per Share (EPS) driven by effective strategy execution.
- 5% increase in revenue, reaching $6.6 billion.
- 12% rise in Aristocrat Gaming segment profit to $3.1 billion.
- Sale of Plarium to Modern Times Group for up to $820 million.
- Return of $1.3 billion to shareholders through dividends and share buy-backs.
Financial Performance
Aristocrat Leisure Limited reported a 20% increase in Earnings Per Share (EPS) for the fiscal year 2024, a testament to its effective execution of strategy, cost optimization, and share buy-backs. The company's revenue rose by 5% to $6.6 billion, driven by the strength of its gaming portfolio and operational leverage across all segments.
Aristocrat Gaming, a key segment for the company, saw a 12% increase in profit, reaching $3.1 billion. This growth was fueled by the gaming operations' outperformance and the expansion of the installed base in North America.
Strategic Divestment
In a significant strategic move, Aristocrat has entered into an agreement to sell Plarium, a mobile-first gaming group, to Modern Times Group for up to $820 million. This transaction includes a fixed consideration of $620 million and a contingent consideration of up to $200 million, enhancing Aristocrat's focus on regulated gaming and real money gaming.
Plarium, which has been part of Aristocrat's portfolio for seven years, generated an internal rate of return in the mid-teens, exceeding target rates. The sale is expected to be dilutive to NPATA by mid to high single-digit percentage points but will enhance revenue growth rates and margins.
Shareholder Returns and Outlook
Aristocrat returned $1.3 billion to shareholders through dividends and on-market share buy-backs in FY24. Looking ahead, the company expects NPATA growth in FY25, driven by investment, innovation, and accelerated collaboration to gain market share.
The strong financial results and strategic divestment are likely to positively impact Aristocrat's stock, as they demonstrate the company's ability to execute its strategy effectively. The sale of Plarium will streamline operations and potentially boost margins, though it may initially be dilutive to earnings.
Investor Reaction:
Analysts are likely to view the strategic sale of Plarium as a positive step towards focusing on core strengths. The strong financial performance and shareholder returns may bolster investor confidence in Aristocrat's long-term strategy.
Conclusion:
Investors should consider Aristocrat's strategic focus and robust financial performance as indicators of potential future growth. Monitoring the company's execution of its strategy in FY25 will be essential for assessing long-term value.