Worldline CEO exits, shares tank as payments firm issues third profit warning

(Reuters) - French payments group Worldline said on Friday its 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.

The shares were down 18% by 1030 GMT, and have now lost about 92% from a high in July 2021 when investor enthusiasm for European payments firms peaked.

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

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

Worldline shares soared 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 since then investor sentiment towards companies in Europe, including Worldline and Italy's Nexi, has soured as results disappointed. Worldline shares lost more than half their value in October last year after it cut its full-year financial targets, sending shockwaves across the sector.

"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".

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

Bluebell partner Giuseppe Bivona said on Friday it was pleased Worldline had made management changes including removing the CEO, but that it wished they had been made earlier "as we would not be in the position we are today regarding operational results and valuation."

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 ranging from businesses to government agencies, also postponed its capital markets day planned for Nov. 26.

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 against Worldline, according to Breakout Point. The funds did not immediately respond to requests for comment.

COST SAVINGS

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.

The group said it would launch further cost saving measures.

Worldline previously cut its full-year guidance in August, citing a sharp decline in domestic consumption trends across Europe and uncertainty about a potential recovery.

($1 = 0.9024 euros)

(This story has been refiled to fix a typo in paragraph 13)

(Reporting by Alban Kacher; Additional reporting by Tommy Reggiori Wilkes and Nell Mackenzie; Editing by Sherry Jacob-Phillips, Mark Potter and Susan Fenton)