Leonteq reported miserable results for last year, as expected. What now? The derivatives boutique has unveiled a host of measures. It is doubtful if they will be enough.
As the Zurich-based company flagged at the end of last year, Leonteq recorded extremely poor results for 2016. Profit for the year tumbled to a paltry 17.2 million Swiss francs from 68.6 million francs in the previous year, the company said in a statement on Thursday.
Leonteq's revenue in the second half of the year faltered, which the company traced back to a combination of various problems and delays in platform partner deals.
Dividend Cut
This accentuated the already weaker dynamic in revenue from the company's shift away from its own derivatives issues. Spending rose sharply as Leonteq invested in new hires and other growth measures, as well as one-time expenses. As a result of the meager profit, Leonteq's board has cut a shareholder payout.
Leonteq said it was too optimistic in how quickly it could clinch and roll out new partnerships, as well as reap revenue from them. The company's board and management are introducing measures to bolster Leonteq's profitability and to repair the company's reputation.
Schoch's Mea Culpa
«With these results, we have disappointed our investors, our clients and our employees, and we feel sorry about this. My colleagues and I are determined to do what it takes to bring our business back on a solid, profitable growth track and to restore confidence in Leonteq,» Leonteq CEO Jan Schoch said in a statement.
«This will take time as past mistakes cannot be fixed overnight and market conditions provide no tailwinds either. However, despite this difficult situation, we continue to be fully convinced of the great potential of our business, and the quality and capabilities of our team.»
This year will be challenging, Leonteq warned, and its measures might not be enough to restore profitability. The company defined its top priorities as:
- improving partner cooperations to resolve operational issues and on-boarding of new tie-ups
- cost cuts versus investments for new business
- increasing profitability by cutting unprofitable activities and improving automation
- improving capital use
Leonteq also pledged to cut spending by 18 million francs, on top of the 10 million francs of cuts disclosed in December.
15 Million in Extra Spending
The combined spending cuts of 28 million francs translate to roughly 15 percent of Leonteq's cost base, which was 179 million francs last year. Based on this year's budget, the company can cut 15 million this year, set against roughly 13 million of expected increases in costs.
Leonteq also flagged 15 million in one-time costs this year, while saying it will keep a lid on spending this year.
More to follow
