Bwin.Party Chief Executive Officer Norbert Teufelberger announced this March that the company had adopted a brand new business strategy in the face of the 2012 financial results. The network was to significantly cut spending on marketing in the .com markets and concentrate on the regulated ones instead. Also, Teufelberger marked a value-based approach instead of volume.
Following the decision, Bwin.Party left 18 markets.
Even though the company is bound to expect long-run positive results, the Q1 report, released on 21 May, scared their shareholders. Gross income dropped by 17% to €180.2 million from last year’s €215.9 million in the first quarter. This is the weakest interim result of the brand in the past three years; only in Q3 2009 did they fare worse.
According to Bwin.Party, the drop is due to the 5% revenue tax on sports betting, introduced in the German market, as well as the reduction in acquisition marketing costs in the .com markets and the lower than expected casino and poker traffic in the same area.
"As previously announced, our shift in tactics will see us optimise the shape and size of our business, a process that is expected to reduce total revenue in 2013 by up to 10 percent compared with 2012. However, our programme to reduce costs is on-track and we remain comfortable with our previous guidance on Clean EBITDA margins, having identified total savings of approximately 70 million euros per annum to be delivered in 2013 with more to come in 2014 and 2015," Teufelberger commented on the news.
Despite the CEO’s optimism, shares of Bwin.Party dropped 5% in just hours following the announcement.
Following the decision, Bwin.Party left 18 markets.
Even though the company is bound to expect long-run positive results, the Q1 report, released on 21 May, scared their shareholders. Gross income dropped by 17% to €180.2 million from last year’s €215.9 million in the first quarter. This is the weakest interim result of the brand in the past three years; only in Q3 2009 did they fare worse.
According to Bwin.Party, the drop is due to the 5% revenue tax on sports betting, introduced in the German market, as well as the reduction in acquisition marketing costs in the .com markets and the lower than expected casino and poker traffic in the same area.
"As previously announced, our shift in tactics will see us optimise the shape and size of our business, a process that is expected to reduce total revenue in 2013 by up to 10 percent compared with 2012. However, our programme to reduce costs is on-track and we remain comfortable with our previous guidance on Clean EBITDA margins, having identified total savings of approximately 70 million euros per annum to be delivered in 2013 with more to come in 2014 and 2015," Teufelberger commented on the news.
Despite the CEO’s optimism, shares of Bwin.Party dropped 5% in just hours following the announcement.
