(News Bulletin 247) – For the third time this year, the outsourced customer relations specialist is revising downwards its turnover target for 2023. Teleperformance cites difficult economic conditions as well as a drop in budgets in the States -United. But for analysts, this adjustment does not come as a surprise given the weak performance that was expected in the third quarter.

Never two without three. And this saying applies perfectly to Teleperformance, which is revising its turnover target downward for the third time for the current year. At the start of the year, the company still anticipated organic growth of 10%.

However, management cites “a demanding environment”, to use the words of Daniel Julien, President and CEO of Teleperformance. The latter also mentions his clients in the United States, many of whom are reducing their budgets, but also “the change in consumer behavior following the Covid crisis”.

A few weeks ago, such an announcement was devastating for Alstom which experienced a historic fall (-38%) after a revision of its cash generation objectives when Wordline was even more severely punished (-59.2%) after having drastically revised downwards its outlook for the current financial year.

Outlook in line with expectations

However, Teleperformance shares rose by 1.8% around 10:45 a.m. after having fallen by 3.6% at the opening in the wake of this new revision of the business outlook of the outsourced customer relations specialist. It must be said that the prospects announced by the French group are in line with the expectations of analysts including Stifel.

“Overall, we consider that the update of the outlook at the end of this third quarter is generally consistent in a context of low expectations,” notes the financial intermediary in its note of the day dedicated to Teleperformance.

The group in fact expects growth excluding Covid contracts of around 6% for 2023, and is at the bottom of the range between 6 and 8%, which had already been lowered in July after slow activity in the second quarter. Note that this new growth objective is understood to be “excluding the impact of exchange rate volatility in hyperinflationary countries”.

For Stifel, this new objective implies like-for-like growth in the fourth quarter, excluding Covid, of around 6%, slightly accelerating compared to the third quarter.

“However, guidance for fiscal 2023 remained unchanged, which could offset any disappointment related to weak third-quarter like-for-like growth, given cautious consensus expectations heading into the release,” the company continued. financial intermediary.

It must be said that between July and the end of September, the company’s activity slowed down further. Growth on a comparable basis and restating the impact of the end of contracts linked to Covid stood at 4%, slightly lower than the consensus cited by Stifel (4.3%). This level of growth marks a clear decline compared to the 5.3% recorded in the previous quarter and the 8.6% over the first three months of the year, “despite a slight improvement in prices”, recalls the financial intermediary.

Overall, Teleperformance achieved a turnover which contracted by 3.3% in published data to fall below 2 billion euros, to 1.99 billion euros. This is much less than consensus expectations, set at 2.07 billion euros on average.

On the profitability side, the group preserves its objective of an operating margin (Ebita) of “around” 16%, which is in line with the consensus and the Stifel estimate (15.9%). “This figure does not take into account the impact of the two-month consolidation of Majorel, which should have a low dilutive effect,” specifies the research office.

An acquisition to digest

To give impetus to its activity, Teleperformance embarked on a major external growth operation last spring. The French group announced in May a major acquisition that was poorly received by investors, namely that of Luxembourg’s Majorel for 3 billion euros.

“It’s a surprising acquisition, to the extent that Majorel is doing roughly the same thing as Teleperformance without any major differentiating factors. It was difficult to predict that the group would launch such a large acquisition, especially in its core business.” [son activité cœur de métier, NDLR]”, judged a financial analyst during the announcement.

Coincidentally, Teleperformance finalized the takeover of the Luxembourg group on Monday, one month ahead of initial forecasts. The merger between Teleperformance and Majorel will give rise to a group with “a turnover of more than 10 billion euros” according to the French group’s estimates. Majorel should help complement Teleperformance’s skills in several countries, particularly in Europe, and accelerate its growth in Asia-Pacific and Africa.

Teleperformance estimates that this acquisition will generate synergies of between 100 million and 150 million euros per year, via “operational efficiency measures”, effects of scale or the development of new products.

A small consolation prize for shareholders, Teleperformance announced on the sidelines of its activity point, a share buyback program worth around 600 million euros by the end of the year. This return to shareholders includes share buybacks for more than 300 million euros and the payment of 227 million euros in dividends. Its aim is to relaunch a stock which is showing one of the biggest declines in the CAC 40 this year (-46.2%), only the Worldline stock doing worse (-64.3%) after its resounding profit warning.

In addition to unconvincing publications, this decline is explained by market concerns which judge the company as a potential victim of generative artificial intelligence (AI) and the automation of certain tasks. Over the last two months, several analysts have expressed concern about the repercussions of AI on Telepeformance’s activity, including UBS at the end of September and Deutsche Bank a week later.

The group even narrowly escaped being released from the CAC 40 last June. The group having remained within the flagship Parisian index, unlike Vivendi which gave up its place to Edenred, during the last quarterly review of Euronext on the Paris Stock Exchange indices.