Kindred reveals 2023 revenue growth as Andén confirmed as permanent CEO

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The group said 2023 was a positive year overall, with Kindred posting growth across both its B2C and B2B businesses. 

However, the year did not come without its challenges, as Kindred in November announced its exit from North America. Kindred expects to be out of North America by the end of Q2, with this exit process now in motion. 

Nils Andén

This forms part of its strategic review that launched in April last year. In relation to this, the group will cut 300 jobs across its business, including in North America. 

Upon launching the review, Kindred said it could result in the full or partial sale of the group. This process has moved forward in recent weeks with French lottery and gaming giant La Française des Jeux (FDJ) submitting an offer worth SEK27.96bn (£2.11bn/€2.47bn/$2.66bn) to acquire all outstanding share capital of Kindred.

Kindred has “unanimously” recommended shareholders accept the offer. The acceptance period is set to begin on or around 20 February and expire on 19 November.

Reflecting on the FDJ offer, as well as Kindred’s performance in 2023, Andén said there is much to be positive about. Incidentally, publication of full results for 2023 come as Andén has been confirmed as permanent CEO.

Andén was appointed interim CEO in May of last year after Henrik Tjärnström resigned. Previously chief commercial officer, Andén now takes on the CEO role on a full-time basis.

“I am grateful and proud to have received the board’s confidence to continue in the role as CEO,” Andén said. “We have a great team who are working hard to deliver on an exciting strategy that will strengthen Kindred’s position in locally regulated markets. I look forward to continuing to execute on our plan.”

Net profit down despite revenue growth at Kindred

In the wake of the FDJ offer, Kindred published preliminary results for the 12 months to 31 December 2023. These figures suggested an increase in revenue but warned of increased costs.

The full-year results reflect these initial figures, with revenue up to £1.21bn as forecast. Of this, £1.17bn came from B2B activities, up 12.4%, while B2C revenue from the Relax Gaming business increased 49.6% to £38.6m.

Kindred said these increases were helped by growth in the Dutch market, following re-entry in July 2022. It also noted success in the UK, as well as strong growth in the casino segment. However, the impact of regulatory measures in Belgium and Norway continued to impact overall growth.

The group did not go into full detail on the performance of each segment, saving this for its Q4 breakdown, but it did detail spending in 2023. 

Cost of sales, its main outgoing, increased by 9.5% to £530.7m and administrative expenses 12.2% to £318.2m. Despite increased spending, underlying profit before items affecting comparability was 93.0% up at £1409m.

However, this did not tell the full story, with other costs also to note. These include £33.8m in market closure and contract termination costs, as well as £20.8m in impairment losses. When also including £8.7m in net finance expenses, this left a pre-tax profit of £59.5m, down 53.1%.

Kindred paid £12.3m in tax, resulting in a net profit of £47.2m, a drop of 60.7% from 2022. In addition, EBITDA for 2023 was 18.6% lower at £152.6m but underlying EBITDA climbed 58.3% to £204.5m.

Kindred slips to Q4 net loss 

Turning to the final quarter of 2023 and Q4 results made for mixed reading. Revenue was up by the group posted a net loss on the back of market closure and contract termination costs and impairment expenses.

Group revenue climbed 2.4% to £312.9m. Some £301.6m came from B2C, up 2.2%, while B2B revenue also increased by 8.7% to £11.3m.  

Starting with B2C, casino and games accounted for 57.0% of all Q4 revenue. Sports betting drew 38.0% of revenue, poker 3.0% and other products 2.0%. Geographically, Western Europe was the main source of B2C revenue at 62.0%, ahead of Nordics (24.0%), Central and Eastern Europe (10.0%) and other areas (4.0%). 

As for B2B, Kindred says the Relax business continues to grow. This was driven by broader distribution of content and new game launches, as well as the success of the Dream Drop jackpot feature across all Relax operators.

Turning to spending, group cost of sales was 3.1% lower at £136.7m but administrative costs edged up 4.3% to £75.9m. Kindred also accounted for other items affecting comparability, including £26.2m in market closure and contract termination costs and £20.8m worth of impairment expenses.

When also including £1.9m in net finance costs, this resulted in a pre-tax loss of £19.1m, in contrast to a £51.9m profit in 2022. Kindred recouped £400,000 in tax benefit, meaning it ended the quarter with an £18.7m profit, compared to the previous year’s £50.0m. 

In addition, EBITDA slumped from £67.6m to £20.0m but underlying EBITDA was 45.3% up at £56.8m.

Positive for the future

Andén repeated his optimism for the future of Kindred, saying the cost-saving initiatives that impact 2023 and Q4 will support the business in the long run.

“Looking back at an eventful and busy year, I can conclude that Kindred is establishing a stronger and more robust foothold in core markets across Europe,” he said. “Operational initiatives announced in November 2023 continue at pace, with a controlled exit from North America and reduction in headcount being actions taken to improve profitability.

“I remain confident that Kindred can deliver above-market growth across our portfolio during 2024. We see robust performance in select core markets, and I expect this momentum to continue going forward.”

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