Worldline shares fall after $1.25 billion hit in merchant services

By Augustin Turpin

(Reuters) -French payments company Worldline plunged to a full-year net loss after it took a 1.15 billion euros ($1.25 billion) impairment in its merchant services division and signalled a weak outlook, sending its shares down 15% on Wednesday.

Paris-based Worldline, which processes digital payments for clients ranging from merchants to government agencies, boomed during the pandemic when investors piled into European payments companies, attracted by their rapid growth as customers ditched cash and by consolidation in the industry.

But Worldline shares lost more than half their value in October, sending shockwaves across the sector, after it cut its full-year financial targets, citing an economic slowdown and heightened scrutiny over money-laundering risks in Germany.

The firm on Wednesday reported a so-called "net loss group share" of 817 million euros for 2023, compared with a 211 million euros profit a year earlier. It also reported a 6% rise in full-year revenue, in line with expectations.

For 2024, Worldline is targeting organic revenue growth of at least 3%, adjusted core earnings (EBITDA) of at least 1.17 billion euros and free cash flow of at least 230 million euros.

JPMorgan said the results and guidance were in line with already significantly lowered estimates.

Worldline said the goodwill impairment was based on "conservative assumptions reflecting the change in valuation paradigm in the payments' industry".

The impairment is non-cash and linked to "the evolution of sector values and the stricter application of technical parameters in the accounting and non-cash valuation of our assets", finance chief Grégory Lambertie told reporters.

Lambertie added that, adjusted for non-recurring items, net income group share was "relatively stable" when compared with 2022, and that the impairment "has absolutely nothing to do with the German subject".

CEO Gilles Grapinet said the group was still looking for a new chair after the death of Bernard Bourigeaud in late 2023, and that a successor should be identified before the end of March. He added that Worldline intended to cut its board of directors to a maximum of 15 members, including two employee directors.

($1 = 0.9215 euros)

(Reporting by Augustin TurpinAdditional reporting by Tommy Reggiori WilkesEditing by Miral Fahmy and Mark Potter)