TALLINN - Estonian casino operator Olympic Entertainment Group has announced an astounding 13-fold drop in third quarter profits year-on-year, rendering the gaming company one of the hardest hit by the financial crisis.
The Nov. 6 company report saw profits nosedive to just 7.4 million kroons (382,000 euros) in the third quarter, translating to an alarming 94 percent drop on results from the same period last year. The company's overall profit for the first nine months has fallen 64 percent to 98.9 million kroons year-on-year.
The following day saw Olympic take a heavy blow on the stock exchange as weary foreign investors dropped holdings, resulting in a 14 percent plummet on the Tallinn bourse in a 9 million kroon turnover. Speaking to Estonian newspaper Aripaev the same day, Olympic's CEO Andri Avila admitted that the company had been prepared for poor results.
"These results are not good, which is why we have launched an efficiency program. However, we expect the fourth quarter to become better since many investments fell in the third quarter," said Avila.
Avila informed The Baltic Times that the company has felt the squeeze of the financial crisis, and cites the public's reluctance to frequent casinos due to tighter times as the primary reason for the company's lack of profit.
"The main reason for the drop in profit is the overall economic slowdown. People just spend less not only at the casinos but for their leisure time in general. We are in the middle of a large efficiency and restructuring program and actively working in both directions - cutting expenses and at the same time trying to increase revenues," Avila told The Baltic Times.
Olympic, which owns 35 slot-machine casinos in Estonia, has now launched an efficiency program in an attempt to claw back profits and bolster the multinational casino giant's standing in the Baltics. The scheme will involve the laying off of 10 percent of their current employees, saving an estimated 37.5 million kroons between May and December next year.
A similar program was initiated in the company's Latvian branch after poor second quarter results. Judging by the improved third quarter results, the scheme has been effective in regaining profits.
"We can see clear results already in third quarter's profit numbers as they are about nine times higher than in the first quarter," said Avila.
In addition to these measures the company has already this year closed down 10 casinos with negative cash flows, with eight such closures taking place in the third quarter. However, despite the company's continued poor performance Olympic persisted in its expansion policy, opening 19 new casinos at a cost of 81 million kroons since January.
While the Baltic market brought about huge slumps, October strangely enough saw Olympic Entertainment Group make record profits in Ukraine, Poland, Belarus and Romania.