Kindred Group to exit US market and streamline operations
Kindred Group has announced its decisive exit from the challenging US market, marking a major change in the company’s global operational focus. The decision, stemming from a comprehensive internal review, will allow Kindred’s to optimize its resources and enhance its position in core markets.
Long-term profitability
Currently facing losses in its US operations, Kindred Group’s withdrawal from the North American market will gradually conclude by the end of Q2 2024.
The decision is not merely a retrenchment but a strategy to redirect resources to markets where the company has a proven track record and a more sustainable competitive edge.
CEO comments
Kindred’s CEO, said that due to the competitive nature of the market, substantial resources are required to narrow the gap between market leaders and operating at the current capacity is unsustainable for the company. Kindred acknowledged the challenges of the dynamic US iGaming sector.
Despite concerted optimization efforts in recent quarters, sustained losses in the US have exerted undue pressure on Kindred Group’s overarching profitability targets. The decision to withdraw from the US market is part of a broader internal strategic review, with potential avenues to include a possible third-party sale.
Unibet in Iowa, Ohio and Ontario
Kindred’s Unibet brand, currently active in states such as Arizona, Indiana, New Jersey, Pennsylvania and Virginia, had previously exited Iowa in December last year.
The withdrawal from a partnership agreement in Ohio during Q3 2023 further signals the strategic focus on repositioning core assets. The Unibet brand also operates in Ontario, Canada, where revenue from these regions experienced an 11 percent drop to £6.4 million in Q3 2023.
Global headcount reduced by 300
The strategic realignment extends beyond market exits, encompassing a significant reduction in the global headcount by over 300 roles, affecting the North American business. Andén explained that this move towards a leaner organization is necessary for enhancing focus on key growth initiatives.
As a consequence of the layoffs, Kindred anticipates that full-year 2024 operating expenses, including salaries, will approximate £245 million. The restructuring initiatives, including the US market exit and headcount reduction, are projected to yield gross cost savings of £40 million.
Andén expressed regret for the impact on colleagues, adding, “It is regretful that valued colleagues will depart Kindred, and we will work hard to support individuals.” The company has also revised its underlying EBITDA guidance for full-year 2024 to £250 million in light of the internal restructuring and the decision to withdraw from the US market.
The market response to this strategic move is evident in Kindred Group plc’s current stock trading at SEK85.12 (-8.28 percent), reflecting the immediate impact of the company’s bold and calculated moves in aligning its operations with long-term sustainability and growth.
