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Worldline plummeted nearly 60 per cent in Paris after the French payments group downgraded its sales outlook and said it was clamping down on fraud in the sector by cutting off some clients.
Shares collapsed to €9.4 on Wednesday, giving the company a market capitalisation of €2.7bn. The warning sparked a rout in the payments sector, dragging down shares in European and US peers.
One of the world’s largest payments specialists, Worldline was spun out of French tech group Atos in 2014. It grew through acquisitions including that of Ingenico, a card payment terminal maker, in 2020. That same year it entered the CAC 40 index of French blue-chip companies with a value exceeding €11bn.
Worldline cited a deteriorating economic backdrop especially in Germany, its biggest market, with shoppers cutting spending, as one of the reasons for cutting revenue forecast for 2023. It now predicts growth of 6 per cent to 7 per cent, from 8 per cent to 10 per cent previously.
The group said it had also cut ties with some merchants as it enforced a stricter approach to cyber crime risks. That raised the spectre for the sector of a broader regulatory crackdown that could yield more pain.
Worldline’s downgrade of its sales outlook is a “shock”, said Hannes Leitner, analyst at Jefferies.
Gilles Grapinet, Worldline chief executive, said: “We face now more challenges than we anticipated even until very recently. The first one is obviously the economic slowdown in Europe . . . most particularly in Germany.”
In September, Germany’s financial regulator BaFin banned Payone, a Worldline joint venture, from taking payments from certain customers seen as posing high money-laundering risks.
Worldline’s warning, coming after a lacklustre third quarter, is raising the prospect of a prolonged consumer spending slowdown, analysts noted, jarring with the French company’s previously upbeat tone.
Jefferies’ Leitner said part of the concern rippling through the sector was that the outlook had been too bullish on the back of a post Covid-19 boom in consumer spending.
“We came out of the pandemic, it felt like all this consumer behaviour would follow through in an explosion . . . To a certain extent that stayed but there’s a normalisation,” Leitner said, adding rising inflation had stung. “The companies have not done a pre-emptive adjustment of managing expectations. They were trying to take ambitious targets and meet those targets.”
Italian rival Nexi closed down more than 13 per cent in Milan trading, while Adyen fell 6.2 per cent in Amsterdam. On Wall Street, PayPal was down 5.2 per cent in noon trading, while Block was down more than 7 per cent and Affirm more than 14 per cent.
Worldline also said its operating margins before depreciation and amortisation would drop 1.5 percentage points this year, when it had previously expected a one point increase.
Third-quarter sales missed expectations, climbing 4.8 per cent at constant exchange rates to €1.18bn. Worldline also scrapped long-term targets beyond 2023 in the update.
Adyen shed more than 40 per cent of its value in August when its profits fell short of expectations. Share prices across the sector have failed to keep up with those of the incumbent card networks Visa and Mastercard in recent years.
Worldline shares had already taken a knock this week after technical problems at some of its payment systems in France over the weekend. These were quickly resolved, but temporarily left clients such as fast-food chain McDonald’s and supermarket group Carrefour unable to process some payments.
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