Kindred calls on full North American exit

Kindred Group Plc has announced its outright exit from all North American markets, as part of its ongoing strategic review overseen by a new executive leadership team.

This morning investors were informed that “Kindred will exit the North American market with the expectation of completing this exit by the end of Q2 2024, subject to regulatory approval.”

The Stockholm-listed online gambling group has initiated a series of cost reduction initiatives which are expected to result in annualised gross cost savings of approximately £40m.

In 2024, Kindred will reduce its corporate headcount by over 300 employees and consultants. The strategic review was initiated on 26 April 2023, which saw Kindred announce that it would examine all options related to the future of its business, including a potential sale.

Nils Andén, Interim CEO of Kindred Group explained: “The cost reduction actions announced today are both necessary and decisive. While it is never a desire to inform valued colleagues of redundancies, this puts us in a stronger position to secure long-term growth for Kindred across our locally regulated core markets.”

The former group CMO, Andén replaced long-term CEO Henrik Tjärnström in May, charged with overseeing Kindred’s strategic review.

Pressure mounts on Kindred to bolster its stagnant or declined market share in key Western European markets such as the Netherlands and Sweden, impacted by significant regulatory adjustments. 

Active in North America since 2018, the market exit will see Kindred retire its Unibet US brand from Canada and the US states of Arizona, Indiana, New Jersey, Pennsylvania, and Virginia.

Once finalised, financial and technological resources will be reallocated to existing core markets to capitalise on the group’s earnings potential and to increase market share.

Kindred has begun new growth initiatives which include additional local casino brand extensions, targeted marketing investments, and strategic projects in selected markets, as well as continued product differentiation with exclusive content.

Andén remarked: “We can now focus our resources and tech capacity towards strategic initiatives and selected markets where we see clear potential to grow our market share.”

Kindred warns of soft November

This morning’s announcement, was made prior to Kindred publishing its Q3 (unaudited) trading update, revealed a year-to-date revenue increase of 18% to £897m, combined with a YTD underlying EBITDA of £148m, marking a 64% increase.

The year-to-date performance exceeds last year’s corresponding results. However, Kindred’s financial outcomes have not reached the 2021 benchmarks, which saw the company earning £1bn with an underlying EBITDA of £296m.

Kindred leadership detailed that period trading saw growth in the online casino segment and strengthened positions in the Netherlands and the UK. This was tempered by regulatory challenges and a softer sportsbook performance.

Enhanced KYC procedures allowed Kindred to expand its active customer base to 1.5 million players, a 7% increase. Nevertheless, Kindred cautioned about challenging trading in November, with results at £3m below the daily average due to a weaker sports betting margin.

Kindred reiterates its underlying EBITDA guidance for FY2023, projecting at least £200m, assuming a normalized sports betting margin in the fourth quarter.

Looking ahead, Kindred anticipates continuing its trend of above-market average growth in core markets, with an estimated market size of £25bn and a projected compound annual growth rate (CAGR) of 6% over the next five years.

Andén concluded: “I am pleased that we have regained our leading position in the Netherlands since our re-entry in July 2022. We also observe positive momentum in the UK, with a 7% growth rate over the same period last year. Despite this, lower-than-expected sports betting volumes across core markets, coupled with a sports betting margin below our long-term average, have adversely affected overall performance.”

“I am confident that Kindred is well-positioned to continue delivering growth rates above the market average across our core markets. These markets have a combined estimated size of £25.3bn and are expected to see a CAGR of 6% over the next five years.