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Shares in Worldline fell more than 50 per cent on Wednesday to a record low after the French payments group warned that revenues and margins would take a hit this year from a deteriorating economic outlook.
One of the world’s largest payments specialists, Worldline was spun out of French tech group Atos in 2014. It grew rapidly through a series of acquisitions, and entered the CAC 40 index of French blue-chip companies in 2020, with a market value of more than €11bn.
By mid-morning on Wednesday, Worldline’s value had shrunk to about €3bn and its shares were temporarily suspended from trading on the Paris stock exchange.
Shares in payments groups have been hit this year as interest rate rises have dented the fintech sector. Rival Adyen shed more than 40 per cent of its value in August when its profits fell short of expectations, while share prices across the sector have failed to keep up with those of the incumbent card networks Visa and Mastercard in recent years.
Worldline’s warning on Wednesday sparked further alarm, however, and dragged down shares in its European peers. Nexi fell 12 per cent in Milan trading, while Adyen was almost 10 per cent lower in Amsterdam.
Worldline said it expected revenues to grow 6 to 7 per cent in 2023, down from a previous forecast of 8 to 10 per cent. It also said operating margins before depreciation and amortisation would drop by 1.5 percentage points this year, when it had previously expected a 1 percentage point increase. Third-quarter sales also missed expectations, climbing 4.8 per cent at constant exchange rates to €1.18bn.
The group blamed a gloomier economic outlook in Europe and particularly in Germany for the downgrades, adding that it had also cut ties with some merchants as it enforced a stricter approach to cyber security risks.
“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,” chief executive Gilles Grapinet said.
Worldline also scrapped long-term targets beyond 2023 in the update.
Grapinet said the pressures facing the company were temporary, but added that it did “not want to bet” that issues such as the German slowdown would “improve meaningfully and quickly in the near future”.
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.