New Mr Green boss defends profit drop

New Mr Green boss defends profit drop

Monday, May 11, 2015
Per Norman said Mr Green invested heavily in marketing costs

New Mr Green president and chief executive Per Norman was forced to defend his company's first-quarter results as the online gambling operator saw a drop in profit.

The Stockholm-based company was positive about rising revenues and active customers, but earnings before interest and tax amounted to just SEK4.3m (€645,100/$518,900), down from SEK25.3m in the first quarter of 2014.

In addition, earnings before interest, tax, depreciation and amortisation (EBITDA) fell from SEK37m in the opening period of last year to SEK24.4m in the latest quarter.

Norman, who took over in late April, blamed high marketing costs and a delay in setting up Mr Green's Italian operation for the fall in Q1.

“Investments in marketing, products and new establishments continued in the first quarter, bringing costs for the quarter to a relatively high level," he said. “The impact of these costs is expected to yield results in coming quarters, but we have already seen how deposits increased during the quarter.

“As communicated, Mr Green has acquired a gaming license for the Italian market. However, the launch has been slightly delayed and is expected to take place during the third quarter, instead of at the end of the second quarter, as planned, thereby adversely impacting earnings in the first and second quarters."

“The Italian operation is not expected to make a positive contribution to earnings until 2016.”

Revenue in the first quarter amounted to SEK195.2m, up 26.6 per cent from the SEK154.2m achieved in the corresponding period last year, while active customers. However, cost of sales amounted to SEK 41.3m, and marketing expenditure was SEK90.2m, compared to SEK62.4m a year ago.

Norman believes the costs are worth it as Mr Green develops a brand that can compete in a competitive market.

"The Mr Green brand is very strong and holds a unique relationship with our customers," Norman said. "As society becomes increasingly digitalised, brands are needed that build loyalty, relationships and customer confidence.

"We will continue to build strong and secure customer experiences with our Mr Green and Garbo brands."

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