Aristocrat Leisure Ltd., the world’s second-largest maker of slot machines, said first-half profit rose 20 percent on increased sales in Japan, Macau and Europe.

Net income increased to A$126.1 million ($102 million), or 27 cents a share, in the six months ended June 30, from A$105.3 million, or 22 cents, a year earlier, Sydney-based Aristocrat said in a statement today. Sales rose 14 percent to A$566 million.

Chief Executive Officer Paul Oneile is boosting spending on new game development to win sales in Europe and Asian markets, such as Macau, and limit the impact of slowing growth at home. He’s trying to revive sales in Japan with games such as “Kaido-oh” that comply with new regulations after a change in rules led operators to defer purchases.

“I am particularly pleased with our results in emerging markets where we have captured a significant share of new opportunities,” Oneile said in the statement. “This provides us with confidence about the company’s potential given the expansion we anticipate over the next few years.”

Net income was expected to rise to A$123.6 million, according to the median estimate of four analysts Bloomberg News surveyed by telephone and e-mail.

Aristocrat share rose 6 cents, or 0.5 percent, to A$13.39 at 10:02 a.m. in Sydney, paring this year loss to 16 percent.

Oneile expects the second-half to “remain difficult” in the company’s main markets of Australia, Japan and North America while it also battles a higher Australian dollar that lowers the value of overseas earnings brought home.

Exchange Rate

The Australian dollar was an average of 8.8 percent higher in the first half against the U.S. currency compared with the year earlier. Against the yen, it was 23 percent higher, with the Australian dollar’s gain cutting earnings by A$10.7 million.

Aristocrat shares closed yesterday at A$13.33 and have fallen 16 percent this year. The company said today it would buy back about A$100 million of stock annually during the next three to five years.

Earnings before interest and tax from North America, the company’s biggest market, rose 0.2 percent to A$123.4 million as a lack of new gambling jurisdictions curbed growth.

Japan turned to a first half profit of A$3.1 million, from a loss of A$9.6 million a year earlier, as the company began sales of four new regulation games. Machine sales in the half were 11,063, falling short of the Oneile’s 20,000 unit forecast, as the “Danceman” game failed to win over customers.

Australian earnings fell 2.7 percent to A$43 million on lower sales following the introduction of smoking bans. Pubs and clubs spent money creating outdoor smoking areas in their venues rather than buying new slot machines, Aristocrat said.

Earnings from the rest of the world, which includes Macau, Europe and South Africa, almost doubled to A$57.7 million from A$29.6 million. The company, already the biggest slot machine supplier in Macau, is increasing its market share as it supplies casinos including those operated by and Wynn Resorts Ltd.