Swedish online gambling heavyweight Kindred Group has reported a 22.7% growth in net profit, amounting to £31.4 million ($39 million), during the three-month period ending on March 31.
The notable increase in net profit is attributed to the diligent cost reduction measures implemented across various operational facets.
This positive outcome was achieved despite a marginal year-on-year revenue growth, with reported revenue for Q1 standing at £307.7 million ($383 million), representing a slight increase of 0.4% compared to the previous year’s figure of £306.4 million ($381 million).
The uptick in net profit can be attributed to prudent expenditure management, with Kindred Group undertaking cost-cutting initiatives across its operations. Last year, the company announced plans for a complete withdrawal from the North American market by the end of Q2 2024 as part of a strategic review. Additionally, Kindred Group initiated a reduction of 300 jobs across its organizational structure.
“We have had a solid start to 2024 with the underlying business operations performing well and operational initiatives moving forward according to plan,” Kindred CEO Nils Andén said.
“The headcount reduction plans announced at the end of last year are progressing as intended, and the North America exit is set to conclude towards the end of the second quarter this year. Our growth plan that we launched during the fourth quarter last year, focusing on Europe and Australia, continues at pace with dedicated strategic growth projects across locally regulated markets.”
By reallocating financial and technological resources to its core markets, Kindred aims to enhance its competitive positioning and capitalize on market potential while fostering growth and market share expansion. The impact of these strategic decisions has already been evident in Q1, as expenditure reductions were observed particularly in areas such as marketing and salaries.
In its trading update for Q1 2024, Kindred reported revenue figures on par with those of the previous year, with revenues in the Western Europe segment showing marked improvement, offsetting the continued decline in the Nordic segment. Notably, the company emphasized its heightened exposure to locally regulated markets, with 84% of gross winnings revenue originating from such markets during Q1 2024, marking the highest exposure to date.
Despite facing ongoing challenges, Kindred underscored a more stable income platform, with gross operating profits maintained at £172 million ($214 million). Operating efficiencies, coupled with stable gross winnings revenue results, facilitated a 19% increase in underlying EBITDA to £59 million ($73.4 million), the highest since Q3 2021.
Revenue from business-to-consumer (B2C) operations remained the primary income source for Kindred, amounting to £297.6 million ($370.5 million), a slight increase of 0.1% compared to the previous year. Additionally, revenue from business-to-business (B2B) operations, inclusive of revenue from Relax Gaming, experienced an 11% increase to £10.1 million ($12.6 million) in Q1.
The company is currently in the process of being acquired by French betting and gambling operator La Française des Jeux (FDJ). In January, FDJ launched a takeover offer to buy Kindred for 130 Swedish crowns ($12.43) a share, which would correspond to an enterprise value of EUR 2.6 billion ($2.83 billion). According to the company, the acquisition of Kindred would create the second-biggest operator in Europe’s gaming sector.