Kindred marks fastest route to ‘normal trading’ as it delivers H1 growth

Kindred Group Plc stated that it has demonstrated its capacity as a ‘resilient and adaptable business’ by delivering growth across all core metrics during unprecedented times.

Publishing its 2020 Interim statement, Kindred has recorded Q2 group revenues of £235m, up 4% on corresponding 2019’s £226m, as 2020 year-to-date revenues stand at £484m (YTD2019: £450m).

Updating investors, Kindred stated that in early March the company had undertaken ‘decisive actions’ to mitigate multiple COVID unknowns, focusing on cost savings and streamlining operational budgets.

“The decisive actions taken by Kindred to mitigate the impact of COVID-19 disruption contributed to an increase of 70 per cent in EBITDA during the quarter,” said Kindred Group CEO, Henrik Tjärnström.

“The main savings were achieved in marketing, which is logical as most marketing is linked to sports events. Over the coming quarters, we plan to increase our marketing towards normal levels in line with our long-term strategy, but we will manage this process in a cautious way.”

Q2 trading saw Kindred undertake a series of adjustments to its sportsbook operations, navigating a period of reduced market activity, which resulted in division revenues decline to £67m (Q2 2019: £108m).

Mitigating circumstances, Kindred reduced its customer free bet and bonus incentives, opting to refocus its inventory on unaffected eSoccer, Darts and Table Tennis markets.

Despite daily sportsbook revenues falling below the £6m mark, Kindred noted that it had maintained a higher operating margin as a result of lower betting duties, highlighting lower trading costs attached to the French market.

Tjärnström continued: “Over the coming quarters, we plan to increase our marketing towards normal levels in line with our long term strategy, but we will manage this process in a cautious way. 

“Betting duties also fell compared to previous quarters, because of the significant impact of sports in the French market, which is subject to the highest tax rates.”

While sportsbook revenues staggered, Kindred’s online casino division saw a 40% increase in Q2 revenues to £150m (Q2 2019: £106m),  with the company emphasising that growth had been delivered as the company adhered to its safer gambling, customer care and sustainability principles.  

Tjärnström added: “Our teams around the world have worked incredibly well in the new environment, both in dealing with the challenges from the pandemic and in driving efficiency as our cost reduction programme continues. Kindred remains conscious of the risk of further disruption both to sports and the wider economy, so we will continue to manage the overall cost base carefully.” 

A further breakdown of interim expenses saw operating costs amount to £212m (H1 2019 £211m), in which marketing costs accounted for £97m (H1 2019 £107m) with workforce salaries maintained at £56m as Kindred reduced group employee headcount by 4% during Q2 trading.

Kindred also declared an underlying EBITDA of £52m (Q1 2019 £31m), delivering a group interim EBITDA result of £94m (H1 2019: £62m).  

Closing its 2020 interim statement, Kindred reported Q2 2020 profits after tax of £27m (Q1 2019: 12.5), maintaining YTD group profits at £28m (YTD 2020: £27m).

Signing-off Kindred’s statement, Henrik Tjärnström detailed confidence in the firm’s post covid recovery to new trading normal 

“In the period up to 19 July 2020, with approximately 20 per cent higher sportsbook margins than in 2019, average Gross winnings revenue in GBP was 40 per cent higher (41 per cent in constant currency) and actives 21 per cent higher than for the same period last year. 

“In the US, the average daily Gross winnings revenue for the period 1 to 19 July 2020 increased by 32 per cent compared to the daily average for the second quarter 2020”,

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