Worldline CEO exits, shares plunge as payments firm issues another profit warning

By Alban Kacher

(Reuters) -French payments group Worldline said on Friday that long-time CEO Gilles Grapinet would leave the company as it issued its third profit warning within a year, sending its shares to a record low.

Investors had piled into Worldline and other European payments firms like Italy's Nexi during the pandemic, attracted by their rapid growth as customers ditched cash and by hopes for more consolidation in the industry.

But Worldline has disappointed investors since with cuts to its financial targets, including one last October that rocked the whole sector when it cited an economic slowdown, and another just six weeks ago when it blamed a sharp decline in domestic consumption trends.

Deputy CEO Marc-Henri Desportes will replace Grapinet, who has been CEO for more than 11 years, as of Sept. 30 and for an interim period, the company said.

A Worldline spokesperson said the decision was aimed at preparing "a new strategic step for the company".

"The CEO change was motivated by the third profit warning within a year with many investors calling for management change," Jefferies analyst Hannes Leitner said, adding that investors expected the new CEO to "ignite organic growth".

Worldline shares were down 18.5% at 1225 GMT. They have now lost about 92% from a high in July 2021 when investor enthusiasm for payments firms peaked.

SIX Group, the largest shareholder in Worldline with a 10.5% stake, said it had no plans to sell. A spokesperson told Reuters that Worldline was of "strategic importance" and that SIX backed Desportes as interim CEO.

Worldline's plunging share price has previously fanned rumours of a potential hostile takeover bid.

Last December activist investor Bluebell urged the company to shake up its board to "restore trust". Reuters reported in January that Worldline had appointed advisors for a defence strategy to ward off any possible takeover.

French bank Credit Agricole revealed in January it had bought 7% of Worldline in a bid to bolster the payments company.

Bluebell partner Giuseppe Bivona said on Friday it was pleased Worldline had made changes including removing the CEO, but that it wished they had been made earlier to have avoided the latest "operational results and valuation."

MORE COST SAVINGS

Worldline said it now expected organic revenue growth of about 1% for 2024, against a previous forecast of 2-3%. It sees adjusted earnings before interest, tax and depreciation (EBITDA) around 1.1 billion euros ($1.2 billion), down from 1.13 billion-1.17 billion euros previously.

The group, which earns a fee for processing digital payments for clients, postponed its capital markets day planned for Nov. 26 and said it would launch further cost saving measures.

Worldline said it saw weaker summer trading and "specific performance issues" in its Pacific business and other markets. It declined to give details when asked by Reuters.

Hedge funds likely profited as Worldline shares plunged.

Funds and asset managers from Greenvale Capital, Blackrock and Systematica all held short positions in the shares as of Aug. 30, according to data platform Breakout Point. Greenvale Capital had recently reduced the size of its short bet, according to Breakout Point. The funds did not respond to requests for comment.

($1 = 0.9024 euros)

(Reporting by Alban KacherAdditional reporting by Tommy Reggiori Wilkes and Nell MackenzieEditing by Sherry Jacob-Phillips, Mark Potter and Susan Fenton)