Shares of the French payment company, Worldline (WLN.PA), plummeted over 50% on Wednesday following the company’s decision to slash its full-year targets. The economic deceleration has adversely impacted Worldline’s operations in pivotal markets, with Germany being a prime example.
Adding to concerns, Worldline revealed that it has terminated relationships with certain merchants to mitigate risks. This move comes in the wake of escalating cybercrime threats, although the company did not specify the merchants involved.
CEO Gilles Grapinet, in a conference call with analysts, shared insights about the prevailing challenges that the company is grappling with in the latter half of 2023. Grapinet highlighted the dampening discretionary spending trends among European consumers due to the ongoing economic downturn. Furthermore, heightened regulatory scrutiny has forced Worldline to revise its merchant risk policies.
The CEO informed that some merchant services activities will be halted within this quarter, with a more pronounced impact expected in subsequent periods. Accompanying the Q3 results, the company’s slides indicated that these contract terminations would extend through the first half of 2024.
Opening day trading for Worldline on the Paris stock exchange was initially delayed due to extreme volatility. Once trading commenced, shares took a nosedive, plummeting by 54% to a historic low by 0843 GMT. This trend also affected other industry players, causing Italian competitor Nexi(NEXII.MI) to fall by 14% and Dutch counterpart Adyen (ADYEN.AS) to decline nearly 10%.
In a revised forecast, Worldline now anticipates organic sales growth for 2023 to be in the 6-7% range, a stark contrast from its previous prediction of 8-10%. The company also adjusted its outlook for its operating margin before depreciation and amortization for 2023, projecting a drop of 150 basis points compared to an earlier expectation of a rise of 100 basis points.
