Kindred Group implements "non-essential" hiring freeze to cut costs
Interim CFO Patrick Kortman outlines three-pronged approach to reduce quarterly administrative costs to £65m including a pullback in the US
Kindred Group is aiming to reduce administrative costs per quarter to £65m after implementing a three-pronged cost-saving strategy.
Speaking on the analysts call following the publication of the group’s Q2 results, interim chief financial officer (CFO) Patrick Kortman explained how the Stockholm-listed firm is continuing to prune its operations.
Total expenses for Q2 amounted to £80.3m, down from Q1’s £82.9m following reductions in salaries and operating expenses.
In the group’s report, Kindred noted the focus on cost optimisation had started to have an impact on its outgoings.
Explaining the firm’s three “buckets” marked for saving, Kortman detailed how the operator had made significant changes to its North American operations, recruitment and investment strategies.
The interim CFO said: “The first one was to reduce losses in North America. As you’ve seen during the first couple of quarters we’ve been around £5m in losses, which is a significant decline compared to last year. One of the initiatives here was to reduce marketing spend ahead of our platform launches.”
US marketing spend decreased £1.7m compared to Q2 2022 as the group pulled back on advertising to focus on the launch of the Kindred proprietary tech platform in New Jersey and Pennsylvania.
EBITDA losses from the North America segment amounted to £5.1m in Q2 and £5.5m in Q1, down compared to Q2 2022’s figure of a £7.4m loss.
Following on from the focus on the Kindred proprietary tech platform, Kortman detailed the second prong of the company’s approach.
He said: “The second was to review our pipeline of investment projects and where we have delayed some projects and also some of them, we have completely scrapped. This is to give room for more important projects such as the Kindred proprietary tech platform.”
Finally, the operator confirmed it had put a recruitment freeze in place for what it deems “non-essential” roles.
Kortman continued: “Thirdly, surrounding cost control, having a recruitment freeze for non-essential roles and not doing automatic replacements of all roles when we have attrition, but really scrutinising and seeing if replacements are needed.
“I think those are the key initiatives and now starting to bear fruit.”
The news of the cost-saving strategies come as Kindred is in the middle of a strategic review of the business, which could eventually lead to the whole or partial sale of the company.
Interim CEO Nils Andén stressed at the beginning of the analyst call that he and Kortman would not delve into the review while it was ongoing, although analysts did apply the pressure on several occasions.
Andén confirmed that no major changes in terms of personnel or strategy would be sanctioned during the review process.
He added: “We are turning over every stone in the company. Once it is concluded we will communicate what that entails but at the moment there are no big changes to our strategy.
“I think the strategic review is progressing according to plan. The management is working very closely with the board to go through it and we’re comfortable in the pace and direction of it. Yes, there have been management changes, but we have a very strong organisation here at Kindred and we’re confident in our future.
“I think its progressing really well, but you’ll have to bear with us and have some patience as we work through it,” he concluded.