Kindred Hit By Rising Costs In Sweden
The Kindred Group has reported a dip in their Q1 profit for 2019 due to the current conditions of Sweden’s new regulated market.
The Stockholm based gambling operator reported a revenue income of 224.4m pounds in the three months ending on March 31, on Wednesday. It was an 8% improvement from the earnings made for the same period last year. Still, the total amount went down by 35% to 30.6m pounds, and after-tax profit came around to half of that, i.e. 15.1m pounds.
Sweden’s new regulated market was launched on January 1. The company blamed the losses on its inability to distinguish itself from all the new online licensees that have been allowed entry into this market. Kindred has been offering bonuses to its legacy and new customers. CEO of Kindred, Henrik Tjarnstrom explained that this bonus can be afforded as the significant uptake on the offers have raised the overall bonus expenditure to 6.6m pounds higher than what it was in the first quarter of 2018.
How will this impact Kindred?
The Swedish market has been rather ruthless on Kindred of late. It deducted 5.2m pounds in betting duties and 3.8m pounds in marketing costs. In conclusion, the launch of Sweden’s new market brought down Kindred’s Quarter One earnings by 18.9m pounds. CEO Tjarnstrom admitted that the company may have to face some short-term margin pressure but believed that these efforts would eventually benefit the group.
Government figures which have been released put Kindred’s Unibet as the numero uno private gambling operator in Sweden’s freshly regulated market. However, it still lags behind two former state gambling domains. However, all does not have to be rotten for Kindred. The rise in Swedish marketing costs will fail to affect the group is the government stands by its promise to levy a blanket ban on gambling advertising.
As it is, Kindred had begun to minimize its reliance on the Nordic market. Sweden’s new regulations have further consolidated this stance. The group’s revenue share improved by seven points to 62% from Western Europe while its Nordic market share dropped eight points to come down to 28% in Q1.
Overall sports betting revenue earned by Kindred charted a 12% growth to reach 106.5m pounds in Q1. The revenue rise of 27% in the Western European market balanced out the 25% dip in the Swedish market.
