November 14, 2018 / 2:39 PM / 25 days ago

Germany's Wirecard sees profit jump but volumes knock shares

FRANKFURT (Reuters) - German fintech company Wirecard (WDIG.DE) raised its profit target after strong third-quarter earnings on Wednesday, but slower than expected transaction volumes in Europe weighed on its shares.

FILE PHOTO: A man walks past the Wirecard booth at the computer games fair Gamescom in Cologne, Germany, August 22, 2018. REUTERS/Wolfgang Rattay/File Photo

Wirecard is the leading German player in a payments sector that is rapidly expanding as established banks struggle to shake off the legacy of the global financial crash a decade ago.

The company, which has this year joined Germany’s blue chip share index, reported a net profit jump of 51 percent to 97 million euros (85 million pounds) in the quarter, thanks to a boom in e-commerce and digital payments.

“We expect strong business growth in both the fourth quarter of 2018 and also the coming 2019 fiscal year,” Chief Executive Markus Braun said.

The company now expects annual earnings before interest, tax, depreciation and amortisation (EBITDA) of 550 to 570 million euros, up from previous guidance of 530-560 million, he said.

The often volatile stock was down 2.8 percent at 1425 GMT, as traders pointed to profit-taking and slight disappointment on transaction volumes. The stock is up by more than 60 percent so far this year.

“Headline numbers are fine and they boosted their guidance, but the devil is in the detail,” said Mark Taylor, sales trader at brokerage Mirabaud pointing to opaque guidance on free cash flow.

Dutch peer Adyen’s (ADYEN.AS) shares lost 10 percent as traders said the stock suffered having been left out of an MSCI index re-weighting.

Wirecard said it was benefiting from the continued growth of ecommerce and digitalisation, an increased number of transactions processed and from recent acquisitions.

In the first nine months transaction volumes increased 44 percent to 90.2 billion with European volumes rising by 21 percent, while Asia business jumped by 78 percent.

“You will see with the full year numbers that we had a tremendous year in terms of new sales,” Braun told analysts on an earnings call, adding that the strong trend of sales seen in the first six months of the year continued in the second half.

Last month, the company had reported a 35 percent jump in third-quarter revenue to 549 million euros, topping analysts’ expectations.

The company said last month that it expects core profits to grow sixfold by 2025 thanks to a boom in e-commerce and digital payments. ($1 = 0.8855 euros)

Reporting by Arno Schuetze and Jörn Poltz; Editing by Jason Neely and Keith Weir

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