Kindred Group has reported an increase of 22.7% in its net profit, to PS31.4m ($39.1m/EUR36.5m), during the first quarter. This was due to cost-reduction initiatives implemented across various areas.
Kindred’s revenue for the quarter ending 31 March is only slightly higher than it was last year. The PS307,7m for the first quarter of 2019 was only 0.4% more than PS306.4m by 2023.
During the same period, however, lower expenditures allowed for an increase in net profit. As part of its strategic review, Kindred revealed at the end last year that it would completely exit North America before the end Q2 of 2024. The company is cutting 300 positions across its business.
Kindred stated at the time that such a decision would allow the reallocation of existing financial and technology resources towards core markets. The company said that it would improve its ability to capitalize on the core market’s potential and increase market share.
This cost-cutting has been evident in the first quarter, with marketing and salary spending being reduced. The net profit was able to increase due to the level of revenue year on year.
Kindred’s CEO NilsAnden stated that “we have made a good start in 2024, with our business operations running smoothly and the operational initiatives progressing according to plan.” The headcount reduction plan announced at the close of last year is progressing according to plan. The North America departure is expected to be completed by the end of this second quarter.
Kindred to undergo “transformational year”
Anden, the permanent CEO who was appointed in February, praised also the Q1 performance, saying that 2024 would be “transformational year” for the Group.
Our growth plan, which we introduced in the fourth quarter of last year and focused on Europe, Australia, is continuing at a rapid pace, with strategic growth projects that are dedicated to local markets.
The Netherlands, UK, and Romania are the main drivers of the 5% growth in the local markets, which excludes North America.
“During the third quarter we introduced the Kindred Sportsbook Platform in an experimental market. The progress made so far has been very positive. KSP is one of the most important projects we have undertaken. It will provide us with flexibility and differentiation to help improve our growth on locally regulated market.
After a strong start to the new year, we have now set our sights on a summer filled with sports including the UEFA Euros and Copa America as well as the Paris Olympics.
Increase in B2C revenues
B2C is still the main source of revenue for Kindred.
The revenue from B2C was PS297.6m. This is just 0.1% more than the previous year. This was made up of 56.0% casino games and 39.0% betting on sports, 3.0% poker, and 2.0% other products.
The Netherlands and Britain continue to be strong performers. Kindred noted that the growth of casino customers in other core markets was also 6.0%.
The result, however, is adversely affected by the weak performance on non-locallyregulated markets. Kindred reported that gross winnings revenues fell 16.0% in comparison to the first three months of 2023.
Western Europe accounted for 64.0% or PS191.5m of the total revenue generated in Q1. The UK and Netherlands grew more than enough to offset the declines of France and Belgium.
The Nordics generated 22.0% more revenue than the previous year, but the PS65.2m was 14.9% less. Kindred explained that this was due to the disappointing performance in Sweden.
The revenue for Central, Eastern, and South Europe reached PS29.8m or 10% of the total quarterly revenue. Romania is continuing to show positive growth, but also there were weaker product margins and casino activities in Estonia and Italy.
Another PS11.1m were attributed to markets such as Australia and North America.
Revenue from B2B increased by 11.0% during Q1
In Q1, revenue from B2B activities increased by 11.0%, to PS10.1m. Revenue in this area is solely from Relax Gaming.
Kindred stated that Relax Gaming is continuing to grow. The revenue fell 11.0% quarter on quarter.
Kindred stated that the Dream Drop Jackpot and the launch of games have a negative impact on the sequential development. It adds that this is in addition to the usual seasonality of quarters.
Kindred spends less 7.8%
Total spending, after analysing cost-saving initiatives and analysing expenses was 7.8% less at 76.4m PS. All external costs, including marketing and salaries, were lower than last year.
Kindred reported only a slight increase in Q1 cost of sales, while the finance costs were barely higher than 2023. Together with a steady income, this left Kindred with a profit before tax of PS39.8m. This was up by 30.9% on the previous year.
Taxes were paid by the group at PS8.4m, resulting in a net profit of PS31.4m for Q1, compared to $25.6m from 2023. EBITDA also increased by 22.3%, to PS58.3m.
Deadline set for FDJ deal
In Q1, the French gaming and lottery giant La Francaise des Jeux submitted an offer of SEK27.96bn for all Kindred’s outstanding shares.
FDJ claimed that the merger would make the company the second-largest operator in Europe. It also referred to the business combined as a “European Gaming Champion” with better revenue growth and profits.
FDJ published the document in February, which is the public offer for acquisition. The acceptance period will last until 19 November.
Kindred shareholders have unanimously recommended accepting the offer.
