Revenue rises but profit before tax tumbles at Eurowag

by | Sep 7, 2023

(Sharecast News) – WAG Payment Solutions, trading as Eurowag, reported a significant increase in first-half net revenue on Thursday, which rose 36.9% year-on-year to €119.1m.
The FTSE 250 company said that growth comprised a solid organic increase of 14.4%.

A breakdown of the net revenue revealed a 14.1% year-on-year rise in payment solutions revenue, bringing the figure to €72.4m.

Organic growth in that segment stood at 12.5%, despite challenges in the commercial road transport (CRT) sector, which saw reduced activity as indicated by fewer kilometres driven.

Mobility solutions revenue saw an impressive surge, almost doubling with a 98.6% year-on-year growth to €46.7m.

Organic growth in the sector is 19.9%, signalling strong sales across all mobility products offered by Eurowag.

The group’s adjusted EBITDA was up 43.5% compared to last year, totalling €50.2m, and reflecting an EBITDA margin of 42.2%.

That growth rate mirrored the impact of the group’s recent acquisitions.

Organic adjusted EBITDA, on the other hand, rose 21.6% to reach €42.6m, with margins at 43.3%.

After accounting for foreign exchange gains due to effective currency risk management, the figure adjusted to €36.6 million.

Eurowag reported €11.7m in transformational capital expenditure and €12.9m in ordinary capital spend in the first half.

The board said its transformative programme was set to finish by the end of 2023, aligning with its previous guidance.

On the downside, however, the company’s profit before tax tumbled 36.7% year-on-year to €8.5m.

The drop was attributed to the increased depreciation stemming from their transformational capital expenditure initiative, inclusion of new acquisitions, and increased interest costs, especially after the acquisition of Grupa Inelo.

Eurowag’s financial position swung from a cash position of €28.7m in the first half of 2022 to a net debt of €300.9m in the same period this year.

Its leverage rose to 2.9x net debt-to-adjusted EBITDA, in line with expectations.

“We delivered strong double-digit organic growth in the first half of the year,” said founder and chief executive officer Martin Vohánka.

“This was in spite of the macroeconomic headwinds across Europe which are impacting the CRT industry through a notable slowdown in freight demand, in turn delivering a reduction in kilometres driven.

“Our performance against this backdrop continues to demonstrate the resilience of our business model which delivers significant growth through the cycle and that our products are truly mission critical to our customers.”

Vohánka said this year, the company had entered a new transformation phase.

“Our priority is the integration of our newly acquired businesses to ensure we fully capture the synergies and cross sell opportunities, as well as deliver on our vision of providing the industry’s first end-to-end digital platform next year.

“Our transformational capex programme, which remains on track to finish at the end of this year, has allowed us to develop and expand our product and service capabilities, strengthen our business operations, and build a unique and scalable technology platform, which we look forward to discussing further at our capital markets day in October.

“We have moved closer to the launch of our integrated platform, which, together with the integration of our acquisitions, gives me confidence that we can unlock further value for both our customers and our shareholders.”

At 0816 BST, shares in WAG Payment Solutions were down 1.3% at 91.4p.

Reporting by Josh White for

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