The challenges faced by the Kindred Group earlier this year have continued as tough conditions in key markets hamper sales in the third quarter.
Emphasising a commitment to growth in locally licensed markets earlier this year, the company stated that the Scandinavian nation continued to adjust.
Q3 sales for Kindred fell a modest 2% to £ 226 million (2018: £ 230.7 million), for the full year to date this amounts to £ 676.6 million, reflecting a 2.9% rise from £ 657.5 million.
Henrik Tjärnström, CEO of Kindred Group, explained as the the group publishes its latest financial report: “Similar to what we saw in the first half of 2019, re-regulation in Sweden resulted in difficult market conditions in the third quarter.
“The current terms and conditions make it challenging to attract customers into the system and can lead to worsening channelisation. This, in combination with a lower than usual sportsbook margin in September, resulted in significantly lower gross winnings revenue and a £12.8m decline in EBITDA contribution from Sweden compared to the third quarter in 2018.
“We also continue to experience headwinds in the Netherlands due to the removal of the iDeal payment solution.”
In August Kindred was given a € 470,000 fine by the Dutch gaming regulator, Kansspelautoriteit for offering online gambling through unibet.eu, through its wholly owned subsidiary Trannel International.
Coming in the midst of a steady stream of fines handed down by the regulator, it was said that games like blackjack, roulette and poker could be played on the website, as well as providing sports bets.
Tjarnström added:“Outside of Sweden and the Netherlands, we continued to see strong growth in several other markets, including the UK and France. Locally licensed revenue growth was particularly strong with 33 per cent growth, or 13 per cent growth excluding Sweden, compared to the same period last year.
“As expected, this resulted in margin pressure from higher betting duties which increased with 26 per cent compared to the same quarter last year. However, this focus will drive more sustainable future profit growth. Locally licensed markets were 57 per cent of overall gross winnings revenue in the quarter.”
With the number of active customers falling to 1.38 million over the period (2018: 1.53 million), income after tax has fell to £ 18.1 million (2018: £ 36.9 million) and £ 45.7 million (2018: £ 92.3 million) over the period from January to September.
EBITDA for the third quarter of the year was £ 37.2 m, down from £ 55.7 m by 33.2%, and from £ 144.9 m by £ 98.3 m for the year to date.
Nonetheless, Tjarnström stayed upbeat on US prospects: “During the quarter, we launched the sportsbook product in New Jersey and the Unibet Sportsbook Lounge in Pennsylvania, with the online products to go live in November.
“This will be a great opportunity to deliver revenue growth and eventually profit in the longer term. Our investments in the USA in the third quarter incurred an EBITDA loss of £1.8m.”