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French payments group Worldline expects revenue growth to slow this year as European consumers curb spending, sending its shares down as much as 15 percent even as it pledges to cut costs and improve profitability.
Worldline gave a forecast on Wednesday as it also announced a loss of €817 million for 2023, citing a revaluation of some acquisitions on its books that resulted in an impairment charge of €1.15 billion. Its shares recovered some of their earlier losses to trade 9 percent lower by midday in Paris.
The Paris-based company is trying to recover from a 60 percent collapse in its share price in one day last October after it provided a bleak assessment of the backdrop in Europe and amid a widespread sell-off in the financial technology sector. .
Revenue growth in 2023 of 6 percent to 4.6 billion euros was in line with revised estimates provided by Worldline in the third quarter.
But it forecasts a weaker outlook for 2024, with sales growth expected to slow to “at least 3 per cent” as households avoid overspending and instead look for cheaper products in supermarket chains, chief executive Gilles Grabint said.
The group has particular exposure to Germany, where the government recently lowered its economic forecasts. High inflation across Europe has affected shoppers' behaviour.
“Since the third quarter of last year, we have begun to see a noticeable deterioration in consumption,” Grabint said. “This remained the case in the fourth quarter and is in line with what we see at the beginning of 2024.”
Worldline is one of the world's largest payments specialists and has grown rapidly through acquisitions in Europe since it was spun off from French IT services group Atos in 2014.
The sector performed well during the Covid-19 pandemic as investors expected that the world would quickly shift away from cash payments. But concerns about the stability of growth have recently raised tensions, affecting Worldline's competitors in American and European financial technology companies, such as the Dutch Adyen Group.
Worldline shares have nearly halved since last year's shock, including Wednesday's drop.
The company recently outlined plans to cut about 1,400 jobs – or roughly 8 percent of its staff – as it seeks to cut annual costs by 200 million euros from 2025.
It said on Wednesday that more automation, technical innovations and regulatory changes as it accommodates a series of acquisitions would boost core earnings from 2024. It is also betting that a partnership with French bank Credit Agricole will provide a boost from 2025, which it expects to raise. . Group sales growth to between 5 percent and 10 percent in the medium term.
