Aristocrat Leisure, the world's second-largest maker of slot machines, launched a $200 million share issue and forecast first-half profits to fall well below market estimates.
The firm said it was looking to raise the capital via a fully underwritten institutional placement to strengthen its balance sheet to deal with current hard times in the gambling industry. Its shares last traded at $3.98.
It said its first-half net profit for the six months to the end of June would be $40-50 million, down by as much as 43% from $70.4 million a year earlier, and below the $68 million forecast in a Reuters poll of nine analysts.
Aristocrat cited general lower demand, particularly in Japan, but said it had improved its share of key markets in Australia and North America.
"The guidance for the first half is disappointing and reflects a combination of continued challenging macro-economic conditions as well as a lack of game releases and weak market demand in Japan," said Executive Chairman David Simpson.
In February, Aristocrat reported a 59% fall in full-year profit and slashed its total dividend payout to 36 cents a share for calendar 2008, down from 49 cents.
The group made net profit of $101.2 million for the year ended Dec. 31, after a second-half profit of just $30 million.
Its share price has risen 2.6% so far this year, outperforming the benchmark S&P/ASX 200 index, down 1.5%.
Gaming machine maker Aristocrat Leisure expects a ''disappointing'' first-half net profit between $40 million and $50 million, mainly as the Japanese market weakens.
The share sale may raise as much as $275 million sale to increase cash during the weak economic climate.
Aristocrat said in a statement that the key factors affecting profit were a $30 million to $35 million pre-tax deterioration in Japanese profitability because the company hadn't released any new games and weak market demand.
The company's Japanese division will post a pre-tax loss, following the prior corresponding period's pre-tax profit of $26.6 million.
''The guidance for the first half is disappointing and reflects a combination of continued challenging macro-economic conditions, as well as a lack of game releases and weak market demand in Japan,'' executive chairman David Simpson said in the statement.
The company, which will release results for the six months to June on August 25, was planning to release a licensed game in Japan in the second half, which was likely to lift performance.
The weaker performance in Japan was partially offset by sales in Australia and North America, the two biggest markets for Sydney-based Aristocrat, where the company had increased market share.