Klarna eyes a return to profit after £98m loss

The boss of the Swedish company Klarna, buy now, pay later, expects to return to profit despite increasing pressure on the industry

The boss of the Swedish BNPL company Klarna now expects to turn a profit again, despite the increasing pressure on the sector.

Sebastian Siemiatkowski, 41, who co-founded the company in 2005, said it was “on track to become profitable this year” after a difficult 2022, when valuation fell from £37.2bn to £5.4bn when the fintech sector was hit by a recession after a pandemic boom.

That forced the company to scale back its operations by laying off 700 employees.

Klarna last made an annual profit in 2018 and no quarterly profit or monthly profit since August 2020.

Last year it posted a record loss of £830 million, even though Siemiatkowski’s salary for 2022 rose 35 percent to £1.05 million. Figures released yesterday showed that first quarter losses had fallen to £98m compared to £196m last year.

Struggle: Klarna last made an annual profit in 2018 and has no quarterly profit or monthly profit since August 2020

But there were loan losses of £60.2 million, down from £90.3 million in 2022. Predictions of a return to profitability came after it partnered with Airbnb to run holiday homes in the US and Canada, allowing users to spread payments over six weeks. .

BNPL allows customers to split the cost of purchases into installments and has become extremely popular with companies such as Klarna establishing partnerships with brands such as Nike and Ikea.

Banks NatWest and Santander, as well as Apple, have launched their own versions. But there are fears that shoppers will be encouraged to overspend, accumulating debt.

The Treasury has unveiled plans to regulate the sector and legislation to oversee the sector is due before Parliament this year.