The core operating profits for 2014 of Bwin.party Digital Entertainment Plc, which is based in Gibraltar, have fallen by 25% to €46.4 million when compared to its profits of €60.7 million during the corresponding period of 2013. In order to reverse this, the company has decided to cut operating costs.
The company’s poor financial performance is mainly due to the fall in online poker revenues at a global level. Bwin.party’s financial report of the first half of this fiscal year reveals that revenue generated by its poker sector fell by 37 percent when compared to the same in 2013.
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Norbert Teufelberger, the chief executive officer for Bwin.party, said: “Trading during the first half of 2014 was mixed with a solid performance from sports betting more than offset by year-on-year declines in casino and poker, particularly in countries that were no longer a core area of focus. We are on-track with our current cost saving measures, however it is clear that a more fundamental approach is needed to turnaround our commercial and operational performance.”
Teufelberger further said that the company should be prepared to make major changes to improve its performance. Bwin.party is currently simplifying its structure so that it can immediately implement plans to increase its revenues, reduce costs related to infrastructure, and increase its focus on players residing in regulated markets. Stating that this approach will enable the company “to consider alternative financing and corporate structures in order to create additional value,” Teufelberger said that the company is confident that it can improve its financial performance by putting its plans its action.
A careful study of Bwin.party’s poker revenue figures indicates that the company’s poker offering has suffered losses all over the world, especially Europe. The company stated that its poker revenue fell chiefly because it withdrew from the Greek market. Although it generated fresh revenue in New Jersey, the company is actually suffering net losses in that state. Bwin.party is therefore planning to cut up to €30 million in operational costs in the current fiscal year and another €15 million the following year.
Bwin.party also witnessed internal struggles for power fuelled by its poor performance. A group of shareholders, under the leadership of Jaon Ader, wanted to dissolve the company’s existing board with Teufelberger as the chief executive officer. Ader, however, was satisfied when one of his associates was given a place on the board.
Meanwhile, the company’s sports betting revenue figures increased by 7 percent.