The chief executive of Kindreds, Henrik Tjärnström, declared that “all options are on the table” when it comes to cost reductions during the company’s fourth-quarter trading update earnings call earlier today (January 13).
While Kindreds’ fourth-quarter revenue is projected to increase by 24.5% year-over-year to £305 million (€343.1 million/$372.2 million), Kindred stated this was not in line with expectations and vowed to take “immediate action.”
Addressing this, Tjärnström stated that Kindred would be examining all cost areas to enhance spending in 2023, adding that no cost-cutting measure was off limits.
“We are scrutinizing all cost items to improve efficiency and are updating our spending channels for 2023,” he stated. “We cannot comment on the total amount at this time.
“But we are clearly reviewing the entire income statement, in that sense, nothing is off the table.”
He stated this was because fourth-quarter revenue was significantly lower than Kindred and market expectations.
“We take this very seriously, we observe the deviation from our expectations and market expectations; that’s why we are taking action now to improve profitability in the short and medium term,” he stated.
Tjärnström stated that Kindred would also be reassessing its investment strategy as part of its cost-cutting measures.
We are realigning our investment priorities to make room for crucial strategic initiatives and cut short-term expenses,” he stated.
“We are also actively seeking continuous opportunities, such as organic acquisitions, to supplement the natural growth of the business, but this is not a new strategy,” Tjärnström said.
**Influence on Income**
Tjärnström outlined four primary factors contributing to the decline in revenue, one of which was the 2022 FIFA World Cup, which he described as a “disruption” to the sporting schedule.
“The World Cup disrupted the sporting calendar, resulting in a reduction of approximately 25% in the number of top football league matches compared to the fourth quarter of the previous year,” he explained. “The World Cup revenue was insufficient to compensate for the impact of fewer matches elsewhere.”
“There were practically no matches during the championship period.”
Tjärnström also attributed the revenue decrease to low betting margins following free bets, at 8.9%, and a £5.3 million payout for the Houston Astros winning the Major League Baseball World Series in November 2022.
**Change in Business Strategy**
Kindred’s performance in Norway and Belgium was also cited as a reason for revenue falling short of expectations.
In September 2022, the Norwegian regulator Lotteritilsynet announced it would impose a fine of 11.98 million Norwegian kroner on Kindred for each day it continued to operate in Norway. In October, the fines were halted as Kindred declared it would no longer operate in Norway.
However, in November, Lotteritilsynet reinstated the daily fines.
The final verdict was reversed in December.
Tjärnström highlighted how Kindred’s alterations to its operations in Norway this quarter affected earnings.
Concerning Belgium, Tjärnström clarified that regulatory modifications enacted in 2019 had a substantial effect on Kindred’s performance in the market.
“Looking back at 2019, the Belgian market introduced limitations for the first time,” he explained. “When these regulatory adjustments occurred, it also raised the question of how to utilize experience as rapidly as possible to address these changes.”
“This is also crucial for a fair playing field in the Belgian market, and we believe that we have implemented these procedures in a more compliant manner than our rivals.”
**Transforming Obstacles into Opportunities**
Tjärnström continued to emphasize the significance of swiftly adapting to regulatory modifications to eliminate any potential negative effects in the future.
“But by adapting to these regulatory changes more quickly than our competitors, we can transform these changes into a competitive edge in the long term.”
Overall, Tjärnström pointed to developments in 2019 – when Sweden launched its regulated gambling market – as the reason the company was able to return to financial success in 2023.
“In 2019, it took us a few quarters to regain growth, but then we observed strong growth in the subsequent quarters.”
**Looking Forward**
Tjärnström acknowledged Kindred’s achievements in the Netherlands, France, and Sweden during the recent period, stating that Kindred intends to “regain its top spot” in the upcoming year.
“The Dutch operation is performing exceptionally well. We are certain that our strategies are sound and we are progressing towards our objectives,” he remarked.
Kindred was absent from the Dutch market for a period of nine months prior to July 2022, as the company awaited authorization from the country’s regulatory body in June.
