Kindred’s announcement that it will undergo a strategic review leaves it with an encouraging performance in the Netherlands, a troublesome one in Norway, and a performance that one commentator called “hardly stellar” in the growth market of the USA.
In a conference call following its first-quarter earnings yesterday (April 26), executives would not discuss the announcement which means it could be sold in whole or in part.
Earnings+More cited “rumours” that Apollo Global Management and Blackstone have examined the company and passed.
But a Kindred acquisition could interest Italy’s Lottomatica or Germany’s Tipico, the newsletter said.
The company announced a 24 percent gain in first-quarter revenue to £306.4m, and a quadrupling of post-tax profit to £25.6m, compared to Q1 2022.
So-called underlying EBITDA doubled to £49.4m in the quarter, the company said.
Kindred reported 7 percent gains in the UK, a market where others have reported weak results, as they implement responsible gambling measures expected in law changes that will follow the white paper.
Kindred has about a 3 to 4 percent market share in the UK, and is poised to gain against operators that have not implemented such measures, chief executive Henrik Tjärnström said.
Denmark gains offset the decline in Norway, where the company is duelling with the government and regulator over Norway’s efforts to protect its monopoly system.
But the “high-risk, dark grey” market of Norway contributes about £40m toward profit, according to Regulus Partners.
Of Norway, Tjärnström said “some of our competitors are not compliant, we are compliant”.
Kindred itself generates only just above 80 percent of its revenue from locally-regulated markets, well below other listed gambling companies, such as Flutter Entertainment and Entain.
The Dutch market is substantial, easily in the top 15 world-regulated online gambling markets, and just behind Spain and Ontario in revenue size, according to VIXIO GamblingCompliance estimates.
The company was market leader before legalisation, with perhaps as much as half the market, according to Regulus Partners.
It is number two in the current market already and will achieve its goal of becoming market leader again by the end of the year, the CEO said.
The Dutch Gambling Authority (KSA) has said that 92 percent of Dutch citizens are currently playing with licensed operators and for those who did not play before legalisation, the estimate was 98 percent.
Both numbers would surpass the channelisation target of 80 percent.
The regulator said it expects annual market revenue growth of 13 to 15 percent per year.
As a July 1 deadline for a ban on non-targeted ads approaches, the number of TV commercials is falling, while internet advertisement numbers are rising, the regulator said.
Radio, TV and billboard advertising will be banned, while targeted internet advertising will be allowed.
Tjärnström said Kindred should expect to do well in the new advertising market, as it will likely be similar to the market prior to legalisation, with few options available for marketing.
The US might be another story, as it has been disappointing for many, other than the top few operators.
Kindred’s gross winnings revenue in the US is only £8m, though it is reducing its losses to £5.5m in the quarter.
But its 8 percent gains in constant currency are “hardly stellar” in a growth market with high costs, Regulus said.
Kindred expects to relaunch its proprietary technology platform in New Jersey in May, and it hopes to gain approval from Pennsylvania in the second half of this year, the CEO said.