Kindred begins 2023 turnaround on cost efficiency to drive profits  

Kindred Group Plc has updated investors on a period of intense activity, in which its business has undertaken a change in leadership and implemented a strategic review of markets and operations.  

Publishing its H1 2023 interim results, the group said it continues to focus on “gaining operational efficiencies to increase profitability”.

Headline growth saw Kindred register Q2 group revenues of £307m, up 29% on Q2 2022 comparatives of £238m. Total revenues for the first half of 2023 stood at £613m, up 26% on H1 2022’s results of £485m.  

Further improvements saw Q2 B2C gross winnings increase by 28% to £298m (Q2 2022: £234m) – reflecting the group’s strong return to the Dutch market, since 3 July 2022 following its temporary suspension since 1 October 2021.

Investors were notified: “Excluding the Netherlands, Gross winnings revenue for the second quarter of 2023 increased by 1%(in line in constant currency) from the same period in the prior year.”

Overall, H1 gross winnings from B2C activities stood at £595m, up 25% on 2022 comparatives of £475m, as Kindred maintained headline growth while overcoming stringent regulatory adjustments in the markets of Belgium and Norway.

Of significance, the Stockholm-listed firm underlined that gross win revenues from locally regulated (taxed) markets reached an all-time high in Q2 2023 – which now generate 82% of corporate revenues.

Interim CEO, Nils Anden, commented: “The ability to maintain the positive business momentum in a time of change is a testament to the strong talent, leadership and commitment across the organisation as well as the proven business model put in place over the years.

“Continued focus on a strong customer offering has resulted in revenue increasing 29% to £307m compared to the same period last year. As revenue increases, we see the true scalability of our business model.

Dutch returns gain on Nordic declines   

Providing a regional breakdown, Kindred Western Europe markets’ (WE) Q2 performance registered a 51% uplift in gross winning to £181m – as noted largely due to resumed activity in the Netherlands.

Excluding Dutch results, GWR slightly declined by 2% to £116m, reflecting a regulatory downturn in Belgium (-28%). Elsewhere, Western European results were propped up by improved UK (+8%) gross win results, in which Kindred cited that it had adjusted well to the market’s new compliance demands.  

In its home market of the Nordics, Q2 2023 saw a 4% decrease in GWR to £71.5m (Q22022: £74m), primarily due to a 7% decline in casino GWR, while sports betting GWR managed to increase by 6%.

Period trading reflected restrictions imposed on Norwegian customers and additional safer gambling measures in Sweden put pressure on revenues. However, Denmark saw a notable 19% increase in GWR driven by growth in both sports betting and casino activities.

In North America, GWR increased by 17% to £8.4m, reflecting improved results in the states of New Jersey and Pennsylvania.

As it stands, Kindred’s geographic makeup sees Western Europe markets represent the majority of GWR at 60%, followed by the Nordics at 24%, CES at 11%, and other regions at 5%

Efficiencies to Come First 

H1 trading saw Kindred implement the first phase of its strategic business review to enhance bottom-line earnings and profitability.

Administrative expenses for year trading stood at £163m, in which costs were attributed to ‘selective headcount growth’ needed to build the company’s proprietary sportsbook platform.

Further comparatives saw group YTD cost-of-sales increase to £268m, reflecting an outlay of £162m in betting duties in licensed markets.

Q2 marketing costs totalled £52m, slightly higher (+£2m) than the same period last year, as Kindred placed a strategic focus towards its re-entry into the Netherlands. 

Citing improved operating efficiencies, the group reported a 120% increase in Q2 underlying EBITDA results to €56m (Q22022: €26m) – as Q2 trading benefitted from 7% increase in EBITDA margin to 18%.

YTD underlying EBITDA for 2023 stands at £105m, as Kindred remains on track to outperform full-year 2022 EBITDA results of £129m – but remains behind interim 2021 EBITDA outcome of £212m. 

H1 trading saw Kindred account for net losses of £6.7m in items affecting profitability related to market closure and contract terminations in the markets of Austria and Germany.

Gross profit rose to £173.8m, a 31% increase compared to Q2 2022, driven by “increased revenues and efficient cost of sales management”. The growth in profits continued into the first half of the year with a gross profit of £344.8m, up 30% from H1 2022. 

Closing H1 trading, Kindred governance maintained its underlying EBITDA guidance for the full year 2023 of at least £200m.

Interim CEO Anden concluded: “It has been an extraordinary quarter in many ways. Our business is showing strong performance in most markets and across product segments. 

“With 82% of our revenue derived from locally regulated markets, it remains as important as ever to influence a stable, level, and sustainable operating environment.

 “Our business is showing strong performance in most markets and across product segments. At the same time, a strategic review has been initiated by the board and changes have taken place within the executive management team. “