Kindred Group - Nils Andén, Tom Banks

Kindred focused on ‘stable markets’ as leadership targets 2023 EBITDA of £200m

Kindred Group Plc has notified investors that Q4 2022 revenue performance did not match its corporate expectations, despite World Cup 2022 trading.

“Contrary to expectations”, the Stockholm-listed operator witnessed a disruption of its winter sports calendar “resulting in a 25% reduction in top football league fixtures”, reflecting a downturn on wagering that was not offset by World Cup events.

Q4 trading saw Kindred register group revenues of £305m, up 24% on 2021 comparatives of £245m. Despite growth, the performance remains below expectations as during Q2 2021 Kindred observed a ‘cooling-off suspension’ from the Dutch KOA market.

This was accompanied by a ‘historically low’ gross profit margin of 53.9%, and higher marketing costs as Kindred asserts that Q4’s underlying EBITDA will stand at circa £39m.

Country-by-country, the Netherlands, France and Sweden continued to see ‘strong development’ – however, this was not the case in Belgium and the Netherlands.

Belgium was an example of a country with ‘an increased sustainability focus’ in 2022, which the group states negatively impacted its revenue from the country.

Meanwhile, Norway has been a thorn in Kindred’s side for much of the past 12 months, where ‘several changes to its offering’ has affected trading.

Notably, the company’s Trannel subsidiary is facing ‘daily coercive fines’ from the national regulator, Lottoslift, which accuses it of targeting Norweigan customers despite not holding a local licence.
To safeguard its 2023 ambitions, Kindred has taken action to address the ‘one-off events’ of Q4 2022 and headwinds in Belgium and Norway.

This includes reducing marketing spending to cut down on North American losses, re-prioritising investment projects to free up capacity for ‘key strategic initiatives and to cut costs. Leadership highlighted that excluding US metrics, period EBITDA would have reached approximately £54m

To further reduce expenditure, the group plans to embark on ‘further optimising’ its operating expenses to improve bottomline earnings results.

Despite an unexpectedly rough ending to 2022, Kindred’s leadership asserts that its Q4 performance is not indicative ‘of the true earnings power of the business’, and maintains a non-recurring indicative guidance for the year ahead.

2023’s indicative EBITDA guidance is provided as Kindred leadership believes that 2022 performance does not match the ‘true earnings’ potential of the company.

The firm anticipates that by December 2023 it will have achieved EBITDA of £200m, based on the assumption of ‘long-term average sports betting margins’ improving profitability.

Providing a long-term outlook, Kindred leadership remains ‘fully confident’ that the business can achieve Capital Markets 2025 financial targets of generating total revenues of £.16bn, combined with an EBITDA margin of 21-22%.

SBC News Kindred focused on ‘stable markets’ as leadership targets 2023 EBITDA of £200m

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