TALLINN - The Olympic Entertainment group, Estonia's largest casino operator, has posted a net loss of 556 million kroons (35.5 million euros) in the fourth quarter of 2008.
Olympic told the Tallinn Stock Exchange on Feb. 27 that the company lost a total of 453 million kroons over the course of last year. The losses mark a significant drop over the company's 2007 results, which saw 366 million kroons in profit.
The company said the 2008 results were strongly affected by fluctuations in the exchange rates of the Ukrainian grivna, Polish zloty and Romanian leu, and accounting losses resulting from the reassessment of several investments that will not have a direct effect on the group's cash flows.
Olympic's currency exchange rate related loss in the final quarter of the year was close to 299 million kroons. The amortization of fixed assets jumped from 83 million kroons in the last quarter of 2007 to 314 million kroons in the final quarter of 2008. The company wrote down assets in the amount of 197 million kroons.
Sales revenue of Olympic in the fourth quarter dropped to 722 million kroons from 802 million kroons a year ago. Annual revenue climbed from 2.49 billion to 2.79 billion kroons.
The share of Estonia in annual revenues was 742 million kroons, of Latvia 657 million kroons, of Poland 549 million kroons, of Lithuania 415 million kroons and of Ukraine 334 million kroons.
In the course of the year the group cut the number of jobs by 288 's approximately 7 percent 's and at the end of the year employed 3,924 people.
In 2008 Olympic implemented an extensive efficiency program. The group closed 10 casinos that had negative cash flows 's at the end of 2008 the company operated 133 casinos in eight countries.
Costs related to job cuts and the closure of casinos amounted to 17.7 million kroons in 2008. The efficiency program implemented in 2008 is expected to have a positive impact on the group's earnings in 2009 's the total estimated amount of which is some166 million kroons.
Moreover, in the first quarter 2009 the group reduced the remuneration payable to employees by 20 percent.
During the first quarter 2009, the group plans to close another 15 casinos that have negative cash flows and continue to closely monitor the profitability of several other casinos. The closures will contribute to a round of layoffs that is expected to see 356 's approximately 9 percent 's Olympic employees lose their jobs over the course of the first quarter.
Part of the plan will see Olympic significantly change its casino entertainment concept by transforming most of the casinos it operates into casino lounges. These changes will see casinos expand the floor areas where customers can spend leisure time without gaming.
Moreover, the range of products on offer in bars at the establishments will be expanded significantly. In addition to the current drink menu at the bar, there will be a food menu that will be aimed at providing inexpensive meals for guests of the casinos. The first casino lounges that will be in line with the new concept are due to be completed at the beginning of the second quarter of this year.
