Home market adjustments impact Kindred’s YTD profits

Replicating market-wide trends, Stockholm-listed Kindred Group Plc cannot escape ‘challenging core market conditions’ as the company continues to experience headwinds in Sweden and the Netherlands.

Publishing its latest year-to-date interim trading statement (unaudited period Jan-Sep 2019), Kindred maintains a positive revenue momentum at £677 million (YTD2018: £ 658m) – as governance underlines ‘strong locally licensed revenue growth at 33%’, highlighting growth in France and the UK.

Despite maintaining robust revenues, Kindred’s performance continues to be impacted by Sweden’s re-regulated market demands, ‘worsening channelization’ which has led to a significant decline in Q3 active player numbers to 1.38 million (1.5 million).

In addition, the multi-market operator continues to experience headwinds in the Netherlands following the removal of ‘iDeal’ payment solutions.

“Similar to what we saw in the first half of 2019, re-regulation in Sweden resulted in difficult market conditions in the third quarter,” said Kindred Group CEO Henrik Tjärnström. “The current terms and conditions make it challenging to attract customers into the system and can lead to worsening channelization.”

A breakdown of corporate costs sees Kindred record a significant 30% increase in YTD betting duties of £148 million (YTD2018: £114m) – with the company reporting £48 million in tax charges during Q3 trading.

Continuing to adjust to multiple home market demands, Kindred records a 32% decline in YTD underlying EBITDA to £98 million (YTD2018: £145m). Closing its trading statement, Kindred governance declares  YTD profits before tax at £54 million (YTD2018: £104m).

Despite tough home market conditions, Kindred governance maintains confidence in the firm’s diverse regulated market make-up, noting growth in the UK and France. The Stockholm enterprise has also launched its first US sportsbook verticals in New Jersey and the Unibet Lounge in Pennsylvania.

Tjärnström added:“Outside of Sweden and the Netherlands, we continued to see strong growth in several other markets, including the UK and France. Locally licensed revenue growth was particularly strong with 33 per cent growth, or 13 per cent growth excluding Sweden, compared to the same period last year.

“As expected, this resulted in margin pressure from higher betting duties which increased with 26 per cent compared to the same quarter last year. However, this focus will drive more sustainable future profit growth. Locally licensed markets were 57 per cent of overall Gross winnings revenue in the quarter.”

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