A restructure of its management team, executing an external investment plan, reducing its focus on poker in Europe and making new additions to the board are just some of the changes bwin.party set out this morning as it looks to breathe life back into its struggling business.
The “very fundamental” reorganisation of the management team, as non-executive chairman Philip Yea described it, was announced after the operator revealed yet another disappointing set of results which detailed a fall in revenues and EBIDTA of 7% and 24% respectively.
Exactly what this reorganisation will look like has yet to be disclosed although the operator said it would keep “an open mind” with it considering implementing alternative corporate structures.
“It's absolutely clear that we have to perform better,” Yea said, explaining its “complex matrix” of a management system had led to the operator losing its focus on the customer and implementing a convoluted decision making process.
“I think the reorganisation that Norbert's [Teufelberger, CEO] announced today is actually pretty fundamental – very fundamental,” Yea said. “So clearing the lines and getting the senior management team organised this way will lead to further changes which will get the customer connection back with the company, where it needs to be,” he added.
Realising value
A change in strategic direction will see bwin.party’s payments processing arm Kalixa enter into a “strategic partnership” with an unnamed firm as it looks to generate greater shareholder value.
According to the company, discussions with a potential partner are at an advanced stage and CEO Norbert Teulfelberger (pictured) told analysts the potential partner will be able to increase Kalixa’s market reach and transaction volumes while an IPO of the buisnes hasn't been ruled out.
Aside from its payment arm, bwin.party will look to build upon its other B2B operations, making reference to the progress made by the likes of Playtech and Kambi Sports Solutions as a reason to ramp up its focus in this area. The company currently supplies the likes of PMU and Danske Spil with sportsbook and gaming platforms respectively, however Teufelberger estimates an additional €65m in revenues could be realised by developing this area of the business.
The company will also look to generate as much as €40m buy selling-off non-core assests and has started the process by disposing of its 40% stake in Vienna-based gaming operator Betbull.
Meanwhile the loss-making US business could also be subject to external investment, with Yea making clear its independent technology platform places it in a position where it could be controlled as a separate entity.
“[The US] is a business that, in due course, with the market opportunities it has, may benefit from having additional capital brought into it. So that's the kind of thing we're talking about,” Yea said.
Despite being an overall market leader there, New Jersey losses amounted to €7.3m for the first six months of the year and with additional losses of €5-6m expected to follow in H2, the business is unlikely to break even before 2016. The operator will increase its US footprint with a Nevada launch in H2 but that will offer little encouragement to investors given its size.
Brand focus
In another interesting move, bwin.party has switched to a brand-led rather than vertical-led strategy as it looks to push its bwin brand heavily in Europe in order to build cross-sell opportunities, while PartyPoker is set to take more of a back seat after the recent revamp of the product failed to halt poker’s decline.
Poker gross gaming revenues fell 37% overall, with active player numbers down 32%. Described as the operator’s “problem child”, Teufelberger said that not only was the poor performance impacting poker itself but it was also proving to be a drag on other verticals with cross-sell opportunities being diminished.
“We have already been concentrating on the bwin brand in Europe, predominantly on sport, and we are seeing some early successes there,” Teufelberger said. “Then obviously from sports, you will be able to cross-sell into casino, into poker. So it [poker] will still be a product which we'll be offering, but obviously we have defocused poker heavily,” he added.
The bwin sportsbook in regulated and taxed markets was one of the few bright spots with revenues up 14% year-on-year with strong positions in the German, Belgian, Italian and Spanish markets. However, total sportsbook stakes were down 5% year-on-year to €1.35bn despite the added bonus of a World Cup in which its core sports betting market of Germany won the tournament.
And its German sports betting income could soon come under threat. The company estimates its holds roughly 35% market share in the country, however, the operator appears unlikely to secure one of 20 available sports betting licences in the country and suggests that unsuccessful companies are likely to launch legal proceedings. Should it not gain a licence, it would be in bwin.party’s interest to delay the start of a new regulatory regime as long as possible.
Volume to value
The operator’s “volume to value” strategy was again cited as a major factor the decline in wagers and its general performance, with its withdrawal from Greece estimated to have negatively impacted revenues to the tune of €11.9m.
However, despite this loss of revenues, the progress made in increasing it proportion of regulated business remains slow. The ratio of regulated revenues increased just four percentage points to 56% and early signs for H2 will do little to budge that figure with average daily revenues in regulated markets down across all verticals.
A scenario whereby both its regulated and unregulated revenues are declining would be counterproductive and undermine its overarching strategy, and it's a scenario close to being realised with regulated reveneus flat across H1 at €178m.
Investors and shareholders will hope the changes outlined today will be enough to return the company to growth sooner rather than later. If not, calls to carve the business up will not only remain but grow stronger.
Yea is more than aware of such voices and did little to quash speculation that something bigger could be on the cards further down the line. “Whatever the scenario,” he said, “it is critical that we get the best out of our assets and that is what this is all about.”
Text zur Anzeige gekürzt. Gesamten Beitrag anzeigen »
Zurück
