Worldline Drops as Payment Firm Books €4.1 Billion Impairment

Mint

3 days ago

(Bloomberg) -- Worldline SA shares fell after the French payments provider booked a €4.1 billion ($4.7 billion) impairment tied to its merchant services business in the second quarter, in the company's first earnings since facing allegations it ignored warnings of fraud.
The impairment on goodwill led Worldline to report a net loss of €4.2 billion in the first half of the year, compared to a net loss of €29 million in the same period last year, according to a statement Wednesday.
The stock fell as much as 8.2% and was trading 3.4% lower at 9:53 a.m. in Paris.
'It was necessary to reflect the reality of the market outlook for the European payments sector, with slower growth than historically forecast,' Chief Executive Officer Pierre-Antoine Vacheron said during a media call.
'Through this impairment, we also wanted to reflect the fact that we are aware that our growth and profitability are not there yet, and that we have a lot of work to do before we get there,' Vacheron said. The impairment has no impact on the group's cash position, according to the statement.
Worldline reported €1.14 billion of revenue in the second-quarter, a 4.4% year-over-year drop and below Bloomberg-compiled analyst expectations of €1.16 billion. Its adjusted earnings before interest, taxes, depreciation and amortization dropped 21.9% to €401 million in the first half of the year, compared to the same period a year prior.
Last month, several media outlets coordinated by the European Investigative Collaborations reported that Worldline was doing business with risky clients with high fraud rates, including pornographers and dating websites, despite warnings from regulators.
The company's share price plunged on the news, cutting its market value — which had previously peaked at about €24 billion around four years ago — to below €1 billion. The Brussels Public Prosecutor's Office subsequently opened a probe into Worldline's Belgian unit while Sweden's Financial Supervisory Authority said it called the company to a meeting.
Worldline announced in July it hired an external firm to go through its portfolio of risky clients in an attempt to restore trust. The company said that preliminary findings show that 'no material need' for Worldline to offboard merchants 'has been identified so far in the regulated entities,' beyond the offboarding that has already been done since 2023.
It will release final conclusions of audits and assessments alongside an earnings report on Oct. 21, the company said.
'To date, we haven't had any significant customer exits, but obviously we have to be very careful', Vacheron said on the call. 'We have no guarantee that exits will not occur, and we have been working very hard since July to reassure clients of our reliability.'
As part of that effort, Worldline said Wednesday it was reshaping some of its leadership. The company has hired a new chief financial officer, Srikanth Seshadri, who will join in September. Its current CFO Gregory Lambertie, its chief people officer Florence Gallois and its head of financial services Alessandro Baroni will all leave the company, according to a separate statement.
On Tuesday, Worldline announced it had entered into talks with Magellan Partners to sell its digital-services unit Mobility & e-Transactional Services as it seeks to focus its business areas.
(Updates with share price, details on executive departures.)
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