Nexi accounts and moves
Nexi archived its 2023 financial statements with a loss of 1 billion due to devaluations. However, the Italian paytech increases revenues and starts a buyback worth half a billion euros. Facts, numbers and insights
Maxi red in Nexi's balance sheet.
Before the opening of the markets, the Italian payments group ( owned by Cdp ) published its 2023 results: financial statements closed with revenues of 3.36 billion euros, up 7% on the previous year, and with an ebitda that rose by 10% to 1.75 billion, in line with the objectives it had set itself, while normalized profit grew by 4.9% to 711.8 million.
“In 2023 we continued our growth path in all geographies, further increased our margins and significantly accelerated cash generation” commented CEO Paolo Bertoluzzo.
However, the balance sheet is negative due to a loss of 1 billion "due – we read in a note – to the non-cash technical write-down of the book value of goodwill and intangible assets, equal to 1.256 billion following the trend in the price of the action and current market conditions”.
The Nexi board of directors has decided to propose to the next shareholders' meeting to be held in April 2024 an 18-month share buyback program up to a maximum of 500 million euros, equal to 13% of the free float.
The "consistent availability" and "strong" ability to generate cash allow Nexi to launch a buyback of half a billion euros, thus starting to remunerate shareholders, the company underlines.
Precisely the launch of a 500 million buyback pushed Nexi shares upwards on Piazza Affari. At the opening, the company's prices achieved one of the best performances of the Ftse Mib, gaining 1.66% to 6.866 euros, but at 11.30 they dropped by -2.37% to 6.59 euros.
All the details.
NEXI'S 2023 ACCOUNTS
Nexi closed 2023 with revenues growing by 7% equal to 3.36 billion euros, while the ebitda rose by 10% to 1.751 billion, bringing the margin on revenues to 52% (146 basis points compared to a year ago ), “also thanks to the faster realization of efficiencies and synergies in light of the integration of the group” specifies the note.
The normalized pertaining profit is equal to 711.8 million, up by 4.9%. “However, the interest paid by the group to honor the debt of over 5 billion also increased: due to the rate hike by the ECB, in 2023 Nexi paid 245 million, 14% more than to 2022" notes the Corriere della Sera .
Excess cash generation amounted to 601.1 million and "confirms strong growth". In December 2023, Nexi's net debt amounted to 5.26 billion euros and the ratio to ebitda decreased to 3 times, a reduction compared to the end of 2022.
Over the entire financial year, investments amounted to 496 million euros, an amount equivalent to 15% of revenues, down 4.6% compared to 520 million euros in 2022.
THE TREND OF THE FOURTH QUARTER
In the fourth quarter of 2023, revenues stood at 912.9 million euros, up by 6.8% compared to the same period of 2022. Ebitda in the quarter amounted to 484.1 million, up by 9 .7% compared to the previous year, and the Ebitda margin reached 53%, an increase of 139 basis points compared to the fourth quarter of 2022.
GUIDANCE REDUCED
Due to "a persistent complex macroeconomic scenario", Nexi revises its guidance on growth prospects compared to what was indicated in the plan presented in September 2022.
For 2024, the company estimates a "mid-single digit" annual growth in revenues, i.e. around 5%, and a "mid-to-high single digit" increase in EBITDA (between 5% and 9% ) with an improvement in margins of over 100 basis points (52% in 2023). Excess cash generation is estimated to exceed 700 million and financial leverage is estimated to fall below 2.9 times (ratio between net financial position and ebitda) including the announced M&A operations and the effects of the share buyback program own. Leverage on an organic basis would fall to 2.6x.
In the medium term, revenues are expected to grow at a mid-single digit annual rate and the EBITDA margin to improve by more than 100 basis points per year. Organic cash generation is expected to reach around 1 billion in 2026 and financial leverage to fall in the range of 2-2.5 times EBITDA by 2026 after further capital return operations to shareholders (around 1.5 times on an organic basis ).
The plan to 2025 envisaged an average annual rate of increase in revenues (in the period 2021-25) of 9% and EBITDA of 14%. Cash generation of 2.8 billion between 2023 and 2025 and financial leverage decreasing between 1 and 1.5 times EBITDA in 2025. The revision of estimates is substantially in line with the consensus of analysts.
THE WORDS OF CEO BERTOLUZZO
“Looking forward, despite a still uncertain macroeconomic context, we will continue to expand our margins and increase cash generation significantly, returning to accelerating revenues in the medium term, also thanks to new growth drivers, such as the eCommerce, Germany and Spain, recently acquired", explained CEO Paolo Bertoluzzo in the note on the 2023 results
. “In light of these prospects – he continues -, we are entering a new phase in terms of capital allocation: we have decided to start the process of returning capital to our shareholders, while continuing the continuous reduction of financial leverage and investments in organic development of business". The board of directors thus decided to propose to the meeting the launch of "a significant program for the purchase of own shares, believing this to be the most effective way to create value for our shareholders at this stage".
START OF THE BUYBACK PROGRAM
Therefore, Nexi's board of directors will propose to the next shareholders' meeting the launch of an 18-month share buyback program up to a maximum of 500 million euros, equal to approximately 13% of the free float. This is the first shareholder remuneration operation since the IPO in 2019.
“In the future, Nexi expects to continue to allocate a significant portion of its excess cash to shareholders through additional share repurchase programs or dividends depending on general market conditions,” the note continues. The start of the buyback program is justified by the "substantial availability of existing cash" and the "strong growth in current and future cash generation", factors which however can support "both the expected debt reduction and the limited M&A opportunities foreseen for the future".
Furthermore, Nexi's management and board of directors believe that the current share price "does not fully reflect the value of the company and its prospects and that the share buyback represents the most effective opportunity for creating value for shareholders ”. In fact, Nexi shares lost 27% last year. The company is currently worth around 8.6 billion euros.
NO ACQUISITIONS IN SIGHT
Ultimately, “we don't see any big M&A opportunities that we desperately want to pursue, we see a number of smaller things, mainly bank books that we can decide whether or not to pursue depending on the value creation for our shareholders in relation to the alternative uses that we can make some cash", explained the CEO of Nexi, adding that "we want to focus on the organic growth of the business and the growth of our initiatives".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/conti-e-mosse-di-nexi/ on Thu, 07 Mar 2024 13:33:32 +0000.