Leonteq, a Swiss provider of structured investment products, is feeling the pressure from difficult markets conditions. The company expects to make less profit than previously anticipated and plans to cut costs. It will also reconsider its dividend policy.
A decline in revenue in the second half and lower contributions from hedging activities weighed on the listed company's results. Operating income in 2016 will decline about 5 percent to 207 million Swiss francs compared with a year earlier, Leonteq said in a statement.
Pretax profit will likely decline to 17 million francs from 69 million in 2015. Due to the development, the executive committee offered to forgo their variable compensation for 2016, an offer the board of directors has accepted. The board will also take a reduction of its compensation.
«Too Ambitious»
«We were unfortunately not able to keep up our revenue growth rates in the second half of 2016, which would have allowed us to better offset strategic investments that in hindsight reflect too ambitious growth expectations under the prevailing market conditions,» said Jan Schoch, CEO of Leonteq, in the statement.
While operating income declined this year, costs increased significantly, Leonteq said. Total operating expenses are expected to rise about 27 percent to 190 million francs, reflecting new hires in 2015 and in the first half of 2016 – personnel expenses rose about 20 million francs year-on-year. As previously announced, the company has had to pay about 7 million francs more in rent. It also had one-off costs of 10 million francs in the second half, part of which was due to a strategy review, the payment of deferred bonuses from prior years to former members of the executive committee, taxes and remaining rental charges for Leonteq's previous premises in Zurich.
Further Cuts Envisaged
Leonteq recently announced the cut of 50 jobs. It now is evaluating further cost-reduction measures and is reassessing the dividend policy for this year. It will present the results of its considerations on February 9, 2017, when it will publish the final 2016 financial results.
