Worldline: Thanks to its services to merchants, Worldline is off to a better start than expected in 2024

Worldline: Thanks to its services to merchants, Worldline is off to a better start than expected in 2024
Worldline: Thanks to its services to merchants, Worldline is off to a better start than expected in 2024

(BFM Bourse) – The payment services group confirms its 2024 objectives, after publishing growth above expectations over the first three months of the year.

Last year, Worldline suffered enormously on the stock market. And that’s an understatement. The payment services group saw its share price plummet by 57% in 2023, notably due to a severe profit warning which led to a plunge in its action of almost 59% over one session, certainly an absolute record for a title of the CAC 40.

The group’s capitalization then melted, which had ousted Worldline from the CAC 40 index last December, and pushed its partner Crédit Agricole to come to its rescue by taking a 7% stake at the start of the year.

At the end of February, the group announced degraded 2023 results, “described as disappointing” by the independent research firm AlphaValue. In short, this year 2023 was clearly one to forget for Worldline.

But the year 2024, “qualified as a year of transition” by management, presents itself under better auspices for Worldline. Over the first three months of the financial year, the payment terminal specialist generated a turnover higher than expectations, at 1.097 billion euros, compared to expectations of 1.083 billion euros in revenue, according to consensus. cited by Oddo BHF.

A dynamism of services to merchants

This level of turnover reflects organic growth of 2.5%, which is considered “weak” by Oddo BHF, but the research office notes that it is above its expectations (+1.2% ) but also the consensus (+0.7%), and that it is an improvement compared to the low point of the fourth quarter of 2023 (+1.3%).

“Worldline’s first-quarter sales were slightly above expectations, driven by improved merchant services, which partly reflected the lower-than-expected impact of merchant contract terminations,” Stifel said.

Payment services offered to merchants generated revenues of 787 million euros, up 3.9%. The company’s main division largely defied market expectations, with consensus expecting revenues of 767 million euros, for growth of 1.3%, according to the research firm. This division turns out to be “more dynamic than expected thanks to good results in new markets, such as Italy”, appreciates Oddo BHF.

As a reminder, Worldline decided to abandon certain merchant services activities last year for regulatory issues. Quoted by Stifel, Gilles Grapinet, the general director of Worldline, indicated that this termination process is now completed. He confirms that this process will cost a maximum of 130 million euros on annual turnover.

The “financial services division” activity fell by 1.4% year-on-year to 225 million euros. Which is not “a surprise” for Oddo BHF, due to the low volumes in the “non-card payments” activity.

“This publication is rather positive in the sense that it gives credence to the financial objectives of managers for 2024 which are not fully integrated by the consensus”, appreciates Oddo BHF.

Renewal of objectives

This publication does not hold any unpleasant surprises, which reassures the market. Worldline, rather accustomed to stock market slumps, jumped another 11.4% to 10.92 euros around 2:45 p.m. Especially since the payments specialist has renewed its 2024 objectives, first announced at the end of February.

Worldline still expects to achieve like-for-like growth of 3% in 2024, an adjusted gross operating surplus of at least 1.17 billion euros and free cash flow of at least 230 million euros.

The payments pro recalls operating in a weak macroeconomic environment. This led it to launch at the start of the year an adaptation plan called “Power24” which will result in the elimination of a maximum of 8% of its workforce (around 18,000 positions in total).

“However, momentum should remain difficult at least until the fourth quarter (low organic growth in turnover) and it will take time to reassure the group’s competitiveness (transformation plan in progress)”, estimates Oddo BHF which remains neutral on the file, with a price target set at 13.50 euros.

The group also announced the effective launch of its joint venture with Crédit Agricole in digital payment services to merchants in France, after obtaining the green light from the European Commission at the end of March. When this project was announced in April 2023, analysts considered this alliance promising, one of them even considering that Worldline had struck “a big blow”.

Sabrina Sadgui – ©2024 BFM Bourse

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