- French pay tech firm Worldline has cut its 2024 outlook due to a decline in domestic consumption trends across Europe.
- Despite challenges, the firm is taking measures to protect cash flow and sees signs of improvement in transaction volumes.
OUR TAKE
Worldline’s redrawn outlook underscores the significant impact of reduced consumer spending and a challenging economic environment across Europe. Despite implementing measures to protect cash flow and improve volumes, the company’s shares have sharply declined, which shed light on the broader pressures facing the payments industry.
-Vivienne Xie, BTW reporter
What happened
French payment technology firm Worldline has lowered its 2024 outlook due to a significant drop in domestic consumption trends across Europe in the second quarter, alongside uncertainty about a potential recovery. This announcement led to a sharp decline in its shares.
The payments industry, facing the end of the post-pandemic boom and rising competition, has seen Worldline particularly impacted. The company, which earns commissions on merchant sales for its electronic payment services, has suffered from reduced consumer spending amid Europe’s economic downturn and a slowdown after severing ties with high-risk merchants to mitigate crime risks.
“The Group has observed a softer macroeconomic and consumption environment in the second quarter with a progressive slowdown of the merchant services volumes growth across all the geographies in Europe,” Worldline stated in its earnings report.
By 0708 GMT, Worldline’s shares had fallen 12%, making it the biggest decliner on Europe’s benchmark STOXX 600 indexes.
Worldline, which handles digital transactions for a wide range of clients, including merchants and government agencies, now forecasts organic revenue growth of around 2-3% and an adjusted core profit (EBITDA) of 1.13 billion to 1.17 billion euros ($1.22 billion to $1.26 billion) for the full year. This is a downgrade from its previous expectations of at least 3% revenue growth and an adjusted EBITDA of at least 1.17 billion euros.
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Why it’s important
To protect its annual cash flow target of 230 million euros, the company has implemented additional measures, particularly in rationalisation and integration costs, capital expenditure, and working capital discipline.
“We have seen an improvement in volumes since the start of the month compared with the low point in June, which is rather encouraging,” CEO Gilles Grapinet said during a call with journalists. Despite the challenges, Worldline’s partnerships and restructuring programme, Power24, are progressing well. The company has increased its cost savings target from 2025 by 10% to around 220 million euros. However, the implementation of its first large-scale restructuring programme since its listing in Paris 10 years ago incurred a non-cash provision of 174 million euros in the first half of 2024, resulting in a net loss of 29 million euros for the period.
