Top tier German eBrokerages have posted disappointing 2000 results.
Comdirect posted possibly the most disappointing results of the ‘Big 3’, as the company paid the price for its aggressive expansion into the UK, France and Italy and gained just 12,000 new customers in Q4 2000. Despite a rise in profits for 2000, Consors announced that it would be looking to cut costs by 15% having won no more than 12,700 new customers in Q1. The final member of the triumvirate, DAB also reported slowing customer acquisition rates and warned the market not to expect the growth rates achieved in 2000 to be repeated in the future.
Both DAB and Comdirect also expressed concerns about several of their overseas subsidiaries, set up amid aggressive organic growth drives in 2000. DAB warned that it would freeze marketing costs in Switzerland and Italy as both units were still some way from achieving profitability, while Comdirect was reported to be considering a range of options for its UK and French units, including outright closure of the UK business.
However, discounting the bear market, the underlying pan-European expansion story of the ‘Big 3’ remains strong. Although damaged, that ‘get rich quick’ appeal hasn’t gone away. As and when market conditions pick up, the ‘Big 3’ still hold all the aces in the race to build a pan-European presence, making it critical for all three to be in a position to react once retail investors regain confidence. In this context DAB’s decision to freeze marketing costs for its loss making country subsidiaries and focus instead on building an integrated pan-European platform looks the right one. Comdirect and Consors are expected to follow similar paths. With an underlying pan-European platform in place, all three will be in a position to ramp up volumes and marketing spend as the markets recover.
