TECHNOLOGY
BBB-[N] EUR Spreads ~1bp Wider
- S&P see FY24 revenue growth of just 1% on operational issues in Australia, merchant contract losses, softening H1 macro and in-sourcing at a large financial client after an M&A deal. Organic growth seen at 3-5% in 2025-2026
- S&P’s EBITDA margin expected to drop to 13.3% in 2024 (previously 15%) due to high restructuring costs, which could peak at EUR 300mn in 2024 and EUR 150mn in 2025. Margin seen at 17% in 2025 (previously 21%).
- Leverage forecasted to rise to 3.5x in 2024 from previous 2.9x estimate, with potential reduction below 3x by 2025 if EBITDA recovers.
- FOCF seen weak at EUR 276mn in 2024 and EUR 397mn in 2025 and has contributed to the negative outlook along with the worse leverage path.
- Don’t expect CEO to change strategy or target to keep S&P leverage <3.5x.
- Upside/downside thresholds are at sustainably below/above 3.5x with downside pressure on continued FOCF weakening or a weaker competitive position if revenues don’t increase by about 5% annually in line with other market players or if restructuring means longer margin suppression.
- Prior bullet looking at S&P’s expectations; https://marketnews.com/technology-worldline-eur-28s-wide-of-double-b-bval-curve
181 words