Worldline CEO Steps Down as Shares Tumble Following Third Profit Warning

LOCAL MARKET COMMENTARY

On the Johannesburg Stock Exchange, both the blue-chip Top 40 index and the broader All Share index gained approximately 0.4% by the close last Friday, ending at 74,367 and 81,978 points, respectively. This week, local investors will closely watch the release of August consumer inflation data on September 18, followed by the South African Reserve Bank's (SARB) interest rate announcement on September 19. A Reuters poll of economists suggests the SARB may cut rates by 25 basis points. Meanwhile, HSBC is reportedly in talks to sell its South African corporate banking unit to FirstRand's Rand Merchant Bank as part of its strategy to divest non-core assets.

EUROPEAN MARKET COMMENTARY

European stocks closed higher on Friday as investors continued to assess the European Central Bank's recent rate cut. Fresh data showed that French inflation eased to 1.8% in August, signalling reduced price pressures in the region. ECB policymakers Francois Villeroy de Galhau and Joachim Nagel expressed optimism about the outlook for lower inflation and interest rates in the eurozone.

US MARKET COMMENTARY

Wall Street's major indexes closed higher on Friday, driven by investor focus on the possibility of a larger interest rate cut from the Federal Reserve next week. Small-cap stocks, which are sensitive to rate changes, outperformed. All three key U.S. benchmarks reached near two-week highs and posted strong weekly gains. Additionally, a survey showed that U.S. consumer sentiment improved in September as inflation eased, though caution remained ahead of the upcoming November presidential election.

ASIA MARKET COMMENTARY

Asia-Pacific markets had a mixed performance on Friday, with Chinese markets hitting their lowest levels since 2019, while Australian markets approached an all-time high. Investors in the region are reacting to India's August inflation data, released on Thursday, which showed a 3.65% year-on-year increase in the consumer price index. This rise, up from a five-year low, exceeded both July's revised 3.6% figure and economists' expectations of 3.5%, according to a Reuters poll.

CURRENCY MARKET COMMENTARY

The South African rand strengthened on Friday, benefiting from a weaker U.S. dollar, as markets speculated on the potential size of a U.S. rate cut expected this week. The U.S. dollar reached its lowest point in nearly nine months against the Japanese yen, following media reports that reignited speculation that the Federal Reserve might implement a larger-than-expected 50 basis point interest rate cut at its upcoming policy meeting.

COMMODITY MARKET COMMENTARY

Following a record-breaking $2,572.81 per ounce on Friday, gold is poised for its best year since 2020, with a 24% increase fuelled by safe-haven demand amid economic and geopolitical uncertainty, along with robust central bank purchases. Meanwhile, oil prices declined on Friday as crude production in the U.S. Gulf of Mexico resumed following Hurricane Francine, and data revealed a weekly increase in the U.S. rig count.

Sibanye Stillwater Limited (SSW) +11.56%

For the six months ending June 2024, the group's basic earnings amounted to a loss of R7.472 billion, improving from a loss of R45.195 billion in December 2023, though lower than the R7.423 billion profit in June 2023. Headline earnings were R137 million, recovering from a loss of R4.107 billion in December 2023 but lower than the R5.891 billion earned in June 2023. Adjusted EBITDA reached R6.648 billion, up from R6.409 billion in December 2023 but down from R14.147 billion in June 2023. The average exchange rate for the period was around R18.72 to the US dollar.

SA Corporate Estate Limited (SAC)+3.39%

For the six months ended June 30, 2024, the Group reported revenue of R1.5 billion, up from R1.1 billion in the same period in 2023. Operating profit increased to R736.3 million from R567.6 million. Headline earnings per share were 14.34 cents, slightly down from the restated 14.42 cents in 2023. Basic earnings per share also declined slightly to 16.33 cents from 16.78 cents in 2023. The net asset value per share rose to 443 cents, compared to 439 cents as of December 2023. A distribution of 12.11 cents per share was declared, maintaining a 90% payout ratio (up from 11.39 cps in 2023).

Kore Potash PLC (KP2) +4.08%

For the six months ended June 30, 2024, the Group reported interest income of USD 2,894, down significantly from USD 51,348 in the same period in 2023, reflecting a decrease of USD 48,454. The loss for the period widened to USD 528,636, compared to a loss of USD 464,983 in June 2023. Both headline loss per share and basic loss per share remained unchanged at USD 0.01 cents, with no change in diluted loss per share either.

Worldline SA (WLN) -14.38%

French payments group Worldline announced on Friday that long-time CEO Gilles Grapinet will step down, following the company's third profit warning in a year, which led to its shares hitting a record low. Worldline has repeatedly lowered its financial targets, citing factors like economic slowdowns and a sharp decline in domestic consumption, with the latest cut occurring just six weeks ago. Shares plunged 18.5% on Friday, marking a 92% drop from their peak in July 2021. The company now expects organic revenue growth of around 1% for 2024, down from the previous forecast of 2-3%, and adjusted EBITDA is projected to be around €1.1 billion, lower than the previous range of €1.13-1.17 billion.

Oracle Corporation (ORCL) +0.40%

Oracle shares initially surged nearly 8% on Friday before paring most of the gains, with some analysts expressing scepticism about the company's ambitious forecast of surpassing $100 billion in revenue by fiscal 2029, driven by AI-related demand for cloud services. At an annual briefing, Oracle projected $104 billion in revenue for fiscal 2029 and raised its fiscal 2026 revenue target to $66 billion from $65 billion. This implies an annual growth rate of 11.7% for the first two years and 16.1% for the next three years, according to Michael Ashley Schulman of Running Point Capital. Despite the tempered reaction, Oracle shares still rose by 1.9%, with at least nine brokerages raising their price targets.

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