Kindred Group labels 2022 a “difficult year” as profits slump
Headwinds in Belgium and Norway contributed to “non-satisfactory” fourth quarter for Swedish operator
Kindred Group has announced that “immediate actions are being taken to improve profitability” after a weaker than expected Q4 contributed to full-year gross winnings revenue (GWR) falling 15% to £1.1bn.
The Stockholm-listed company revealed in unaudited results this morning that GWR for its core B2C arm slid 17% in 2022 to just over £1bn, although excluding the Netherlands it increased by 3%.
Meanwhile, underlying EBITDA plummeted 61% from £332.1m in 2021 to £129.2m last year.
Pre-tax profits were £126.8m – down from £338.4m the prior 12 months – while earnings per share came in at 54p, compared with £1.31 in 2021.
As for performance in the fourth quarter, the operator reported that B2C and B2B GWR was up 24% to £305.9m, helped by the winter World Cup, while underlying EBITDA rose 42% to £39.1m.
The number of active customers jumped 25% year on year in Q4 from almost 1.5 million to just over 1.8 million, which was the firm’s second-highest active customer base in its 25-year history.
However, lower-than-average sports betting margin of 8.9% “impacted negative on revenue”, Kindred stated.
Casino accounted for 54% of GWR in the fourth quarter, with sports betting generating 41% of GWR. Poker and ‘other’ was 3% and 2%, respectively.
GWR for casino and games increased 25% in Q4, while sports betting and poker were up by around fifth compared with Q4 2021.
As for markets, Kindred reported a strong performance in the likes of Sweden, France, the UK Romania and the Netherlands.
Management said that despite Netherlands “continuing to exceed expectations” following the re-entry of the flagship Unibet brand in July 2023 – resulting in daily average Dutch GWR of £0.6m – Q4 for the group “fell significantly short of our ambitions expectations”.
CEO Henrik Tjärnström said: “The non-satisfactory performance during the fourth quarter, attributed to these one-off items as well as the headwinds in Belgium and Norway, have led to actions being taken to further improve profitability.
“These include reducing losses in North America, re-prioritising investment projects and further optimising the Group’s operating expenses to improve scalability, and we expect these actions to materially lower our growth in operating expenses.”
As for full-year 2022, Tjärnström said it was “a difficult year in many ways, not only for Kindred”.
He continued: “However, while the geopolitical uncertainty and cost-of-living challenges remain, the actions now taken and a large customer database from the fourth quarter will strengthen our path towards our 2025 financial targets.”
However, the company said £7.1m had been set aside for a fine it expects to receive from the UK Gambling Commission “following reviews” by the regulator. “The amount provided is based on current discussions with the UK Gambling Commission and the group awaits the final outcome,” Kindred said without providing any further detail.
As for a trading update up to and including 5 February 2023, Kindred said daily average GWR was up 36% (32% in constant currency) to £3.7m.
Meanwhile, sports betting GWR has been positively impacted by a stronger sports betting margin of 12.2% after free bets, up from 10.2% for the whole of Q1 2022.
The market responded positively to the results as the company’s shares climbed 6% to SEK114.5 (£8.98) in early trading.
Kindred announced last week that its revenue from harmful gambling had fallen to 3.3% in the fourth quarter of 2022.