Kindred Group revenues fall 5% in Q4 as poor sportsbook performance bites
Stockholm-listed operator hit by French turnover tax, low sportsbook margin and regulatory headwinds
Kindred Group this morning reported a 5% dip in Q4 revenues to £236.2m as the operator was plagued by below-average sportsbook margins and regulatory restrictions in the Dutch and Swedish markets.
Underlying group EBITDA for the fourth quarter dropped to £30.7m, down from £58.8m in the same period in 2018.
Below-average sportsbook margins from several markets, including France, was cited as a contributing factor in the decline, reducing fourth-quarter profits after tax to £13.3m from a previous Q4 2018 high of £45m.
Addressing this decline, Kindred cited the impact of betting duties paid in the French market, which were calculated on a turnover basis, with the lower margin increasing the financial impact on revenues.
However, the French government changed the calculation of betting duties from a turnover-based model to a tax model based on revenue with effect from January.
In addition, net cash generated from operating activities more than halved during the quarter, falling to £30.5m from a 2018 high of £65.2m.
Despite the below-average sportsbook figures, the number of active Kindred Group customers increased to 1,603,903 from a previous Q4 2018 figure of 1,568,574.
Nordic gross winnings revenues fell by 20% from a Q4 2018 high of £79.5m to £62.9m.
Gross winnings revenues from the group’s Central, Eastern and Southern European operations rose by 13% to £145.1m, while gross winnings revenues from Western European operations fell by just under 2%.
Kindred Group CEO Henrik Tjärnström said: “Some of the factors that impacted the fourth quarter of 2019 were the same as we reported in previous quarters, such as the Swedish regulation and increasing restrictions in the Dutch market.
“These and other headwinds are a normal part of our business that we address, adjust to and, over time, use as a competitive advantage.
“As we noted in our trading update on 13 January 2020, there were some temporary factors that reduced the profit for the fourth quarter. We had below average sports betting margins in many markets, including France,” Tjärnström added.
Despite the disappointing performance in the quarter, Kindred’s full-year 2019 revenues increased to £912.8m from the £907.6m reported during FY2018.
Underlying EBITDA for 2019 decreased from £203.7m in 2018 to £130m during FY2019, while profits after tax also fell sharply to £56.6m in 2019 from a previous 2018 high of £131.6m.
Kindred’s share price rose by 4% in early trading to SEK55.10 a share.