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Kindred faces ‘difficult market conditions’ in Q3

Publishing its interim report for the period January – September 2019, Kindred Group has pointed out that ‘re-regulation in Sweden resulted in difficult market conditions in the third quarter.’

Despite the operator group facing regulatory headwinds in both Sweden and the Netherlands, it has maintained its positive revenue momentum at £677m, up from £658m in 2018. Kindred has attributed this to ‘strong locally licensed revenue growth at 33%’, having highlighted its successes in both France and the UK.

Kindred’s performance has been hampered by a significant decline in Q3 active player numbers to 1.38 million, down from 1.5 million in 2018, while the operator has also faced challenges following the removal of ‘iDeal’ payment solutions in the Netherlands.

Kindred Group CEO Henrik Tjärnström commented: “Similar to what we saw in the first half of 2019, re-regulation in Sweden resulted in difficult market conditions in the third quarter. The current terms and conditions make it challenging to attract customers into the system and can lead to worsening channelisation. 

“This, in combination with a lower than usual sportsbook margin in September, resulted in significantly lower Gross winnings revenue and a GBP 12.8 million decline in EBITDA contribution from Sweden compared to the third quarter in 2018. We also continue to experience headwinds in the Netherlands due to the removal of the iDeal payment solution.”

Kindred has also recorded a 32% decline in YTD underlying EBITDA to £98m, down from £145m in 2018, while profits before tax dropped from £104m to £54m.

Tjärnström continued: “Outside of Sweden and the Netherlands, we continued to see strong growth in several other markets, including the UK and France. Locally licensed revenue growth was particularly strong with 33 per cent growth, or 13 per cent growth excluding Sweden, compared to the same period last year. 

“As expected, this resulted in margin pressure from higher betting duties which increased with 26 per cent compared to the same quarter last year. However, this focus will drive more sustainable future profit growth. Locally licensed markets were 57 per cent of overall Gross winnings revenue in the quarter.”

But despite domestic challenges, Kindred has emphasised its confidence in the firm’s diverse regulated market make-up, noting growth in the UK and France. The Stockholm enterprise has also launched its first US sportsbook verticals in New Jersey and the Unibet Lounge in Pennsylvania.

Tjärnström added:“Outside of Sweden and the Netherlands, we continued to see strong growth in several other markets, including the UK and France. Locally licensed revenue growth was particularly strong with 33 per cent growth, or 13 per cent growth excluding Sweden, compared to the same period last year.

“As expected, this resulted in margin pressure from higher betting duties which increased with 26 per cent compared to the same quarter last year. However, this focus will drive more sustainable future profit growth. Locally licensed markets were 57 per cent of overall Gross winnings revenue in the quarter.”

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