Worldline Underperfors Into BB+ Territory As FY Growth Outlook Falls Short Of S&P Forecast

Profile: NR/BBB-[S]

• Worldline 27s/28s are +30bp/35bp MTD which has seen it widen to sit just shy of a BB+ Corps curve.
• Worldline reported on 01 August in what we saw as negative results on worsening organic growth across both the Merchant/Financial Services due to macro headwinds and contract losses, notably lower H1 organic EBITDA margins due to the loss of high margin online contracts and with FY guidance lowered to +2-3% organic revenue (from at least 3%) and EBITDA guidance of EUR 1.13-1.17bn (-2% at the midpoints).
• Credit metrics were more stable with H1 FCF not as bad as expected (EUR 65mn +58% vs. consensus but still roughly two-thirds lower YoY due to Power24 costs) with guidance left in place and stable leverage at 1.5x from 1.6x at FY23/H123 while FY FCF guidance was left in place. MT op targets were also unchanged though we note a November CMD where these appear likely to be altered.
• S&P’s stable outlook in November reflected expectations for 5-6% organic growth with profitability remaining at 15-17% and a decline in leverage from 2.8x to 2.6x at FY23. The renewed guidance clearly implies the growth forecast will be missed though the leverage forecast is still on track and BBG consensus implies a flat reported EBITDA margin in FY24.