Adjustment of 2018 EBITDA related to Banks & Acquirers under-performance

Ingenico Group (Euronext: FR0000125346 - ING), the global leader in seamless payments, today announced its preliminary 2018 performance (1) and its action plan for the year 2019.

2018 performance: €485 million EBITDA2 / 18.3% margin, versus €510 million expected 

  • €485 million EBITDA, representing an EBITDA margin of 18.3%
    • Retail : operating performance in line with our expectations
    • Banks & Acquirers : unfavorable geographical and product mix weighting on Group’s EBITDA
  • 5% organic growth in Q4’18, consistent with the Q3’18 rebound, but short of our initial expectations
    • Retail: 9% organic growth3 (vs. +9% in Q4’17) fueled by SMB activities (+20%)
    • Banks & Acquirers: 1% organic growth (vs. +12% in Q4’17) in a challenging environment in EMEA
  • Revenues of €2,643 million, up 5% on a reported basis and up 2% on a comparable basis
  • 2% organic growth in 2018
    • Retail: 8% organic growth, of which 11% in payment services, with an acceleration in H2’18
    • Banks & Acquirers: 4% organic decline of which 21% decline in EMEA with a dynamic softer than expected and impacted from the ongoing consolidation headwind effects
  • Adjusted FCF4 conversion rate of 55%, above the 40-45% guidance
  • Net debt / EBITDA ratio of 3.15x, slightly above the c.3.0x guidance

Nicolas Huss, Chief Executing Officer of Ingenico Group, commented: « In 2018, Retail grew significantly, accelerating its growth in the second half of the year. This performance confirms the relevance of our acquisitions and our organic developments. However, Banks & Acquirers did not perform as expected which prevents us from achieving our 2018 guidance. Ingenico Group acknowledges these results and is implementing action plans in order to improve its future performance. In 2019, the Retail division will keep on growing. The contribution of the PAYONE joint-venture will strengthen our leading position in Germany, Austria and Switzerland, which are high potential markets, while Paymark will complete our offering within the Pacific region. Regarding Banks & Acquirers we are implementing the cost reduction plan already announced. »

Nicolas Huss concludes: « On February, 12th, I will present our 2019 financial guidance for the Group and will detail the ongoing action plans. »

Fourth quarter 2018 performance

In the fourth quarter 2018, revenues totaled €727 million, representing an increase of 5% on a reported basis, including a negative foreign exchange impact of €17 million. On a comparable basis, revenues was 5% higher than in the fourth quarter of 2017.

The Retail business unit revenues reached €364 million, up 12% on a reported basis, impacted by a negative foreign exchange of €6 million. On a comparable basis, revenues grew by 9% in the fourth quarter of 2018. Small & Medium Businesses division has delivered a strong double digit organic growth (+20%), driven by merchant gains, growth in acquiring volumes and German turnaround. Global Online activities are up 8% fueled by contracts ramp-up and new client gains. Enterprise division, up 1% organically as expected, has seen its overall performance impacted by a lower contribution from payment acceptance solutions to large retailers, while in-store gateway processing activities continue to grow.

During the last weeks of 2018, Ingenico Group has not recorded the expected trajectory for Banks & Acquirers business unit. Revenues reached €364 million, down 1% on a reported basis, impacted by a negative foreign exchange of €11 million. On a comparable basis, revenues grew by 1% in the fourth quarter of 2018. Performance has been lower than expected in EMEA (21% organic decline) and in North America (13% organic decline), while Latin America and Asia-Pacific regions came in line with our expectations with +61% and +12% organic growth respectively.

2018 operating performance

In a context of a lower growth within Banks & Acquirers, Ingenico Group expects €485 million EBITDA for the year 2018 versus €510 million initially anticipated. The contribution from the Retail business unit Retail came in line with our expectations. The contribution of Banks & Acquirers business unit was down, mainly impacted by the non-execution of contracts factored in Q4’18, a different than expected product mix, mainly a lower contribution from Axium, an unfavorable geographical mix and a negative foreign exchange impact.

Furthermore, the Group has pursued a strict financial discipline. The EBITDA conversion rate has reached 55%, above the guidance of 40-45% announced in October 2018.

As of end 2018, Net debt / EBITDA ratio reached 3.15x, slightly above the c.3.0x guidance

2019 action plan

In light of the 2018 performance, Ingenico Group is implementing the required action plans. The Banks & Acquirers business unit will be optimized, including in particular a cost savings program as well as a commercial turnaround. Group support functions will be optimized as well. Regarding the Retail business unit, investments will be accelerated within the fast growing segments. The business unit will benefit from the integration of BSPayone and Paymark.

The Group will communicate its financial guidance for 2019 and detailed action plans during its full year 2018 results presentation on February 12th, 2019.

 

 

  1.   Non audited figures
  2. EBITDA is not an accounting term; it is a financial metric defined here as profit from ordinary activities before depreciation, amortization and provisions, and before share-based compensations
  3. On a like-for-like basis
  4. Adjusted free cash-flow from non-recurring items (restructurings, M&A)