(News Bulletin 247) – If leaving the flagship index of the Paris Stock Exchange can constitute a downgrade which punishes an often difficult stock market journey, a return to grace remains possible.

We have regularly wondered whether an entry on the CAC 40 could mark a stock market turning point for a company. Euronext’s scientific council must also rule on a potential new composition of this index on Thursday. But what about companies which, on the contrary, find themselves expelled from the CAC 40?

The immediate impact is theoretically negative since these stocks are supposed to be penalized by index funds which must sell their stock to continue to replicate the index.

But in the longer term, how are the shares of companies that have left the elite of the Paris Stock Exchange evolving?

Perhaps the most striking example of the last ten years remains Peugeot SA. In the midst of financial difficulties – the group was burning through around 200 million euros of cash per month – the Sochaux car manufacturer was expelled from the CAC 40 in September 2012. But PSA managed to reinstate it a little later, in March 2015. method Carlos Tavares, who had taken the position of general director the previous year, then produced its first effects.

Without going back that far, we took the latest CAC 40 releases since 2017 to observe the behavior of each stock. The graph below compiles the stock market variation of each company since its last expulsion from the flagship index. Very diverse situations emerge.

LafargeHolcim and TechnipFMC left the Paris Stock Exchange

Let us first discuss very specific cases. Our infographic does not include LafargeHolcim, which left the CAC 40 in 2018, nor TechnipFMC, released in March 2020. Quite simply because these two groups have since abandoned the Parisian market.

In the case of LafargeHolcim, remember that the group was born from the merger between the French cement manufacturer Lafarge and its Swiss competitor Holcim, in 2015. But in 2021, the name of the French group was removed from the new group and, above all, the listing in Paris was canceled at the end of 2022, to focus on that in Zurich. The company itself explained that volumes in Paris had declined over the years.

The case of TechnipFMC is more complex. Resulting from the 2017 merger between the French oil services group Technip and the American FMC, this company split in two again in February 2021, listing Technip Energies separately, which brought together its engineering activities. TechnipFMC then gradually reduced its stake in Technip Energies (it had initially retained 49.9%) and removed its own Paris listing at the start of 2022.

Let’s also quickly move on to Nokia, which left the CAC 40 in December 2017 after joining it at the beginning of 2016. Nokia had briefly joined the Parisian index to replace Alcatel Lucent, a French group that the Finn had bought at the same time. Since his ouster, Nokia shares have fallen by more than 30%. But the Parisian listing of the telecom equipment manufacturer remains very secondary compared to that of the Helsinki Stock Exchange…

The heavy fall of Atos

Several groups continued to suffer after their exit from the CAC 40. The most striking case remains Atos. When the digital services company left the elite of the Paris Stock Exchange at the end of September 2021, its shares were already falling by around 30% year-on-year. However, its descent into stock market hell was only just beginning. The stock has since lost 97.5% and Atos has suffered a series of disappointments, partly because the company underestimated the decline of its outsourcing activities as well as the rise of the public cloud. But also due to chronic strategic and managerial instability (five general directors have succeeded one another since 2019). In search of 1.7 billion euros in funds in various forms to ensure its survival, the company is currently the subject of several takeover offers. But in any case, a financial restructuring and massive dilution awaits its shareholders…

Released in March 2017 and June 2019 respectively, Klépierre (-27%% since its release) and Valeo (-59.6%) were not helped by their environment. The shopping center operator, like all listed real estate companies, suffered from the impact of the pandemic and then the rise in interest rates which put pressure on the real estate sector. Valeo has suffered, in recent years, from the “stop and go” of production by automobile manufacturers (linked in particular to supply difficulties), from the inflation of raw materials (more difficult to pass on for equipment manufacturers than for automobile manufacturers). ) but also a disappointing investor day in February 2022. The ongoing electrification of the automotive sector is also putting the profitability of equipment manufacturers under pressure, as Bernstein highlighted this week.

Worldline, for its part, has lost 21.55% since its recent exit (December 2023) from the CAC 40. In difficulty with the market since a heavy warning on results last fall (the action had fallen by 59% over one session, a record for a CAC 40 value), the payments group disappointed again when it published its annual results in February. However, activity in the first quarter of 2024 was more encouraging.

The comeback of Accor…. and Alstom

Conversely, several former members of the CAC 40 have signed an increase since their departure from the CAC 40. That of the Belgian chemicals group Solvay (+2.7% since its exit in September 2018) is, admittedly, insignificant. The company was also split into two at the end of 2023, with specialty chemicals on one side, via the new company Sysenqo, and traditional chemicals on the other, remaining in the fold of Solvay.

Sodexo (+35.5%) has, for its part, raised the bar more clearly, after leaving the CAC 40 in September 2021. The collective catering group has often positively surprised the market when publishing its results and the split of its restaurant and gift vouchers branch, which gave rise to the birth of Pluxee in February, was well received by the market. After this operation, the group now weighs 12.9 billion euros on the stock market, which does not make a return on the CAC 40 inaccessible.

Vivendi (+19% since its release in March 2023) and Accor (+63% since September 2020) have already returned to the index. The case of Vivendi is particular, because the group only experienced a very short-lived exit from the CAC 40. Euronext’s scientific council decided to oust the media group in June 2023 and finally reinstate it six months later. . Since then, Vivendi has delighted investors with a proposed split into four entities, which should allow it to reduce its heavy conglomerate discount.

The great comeback on the CAC 40 is to the credit of Accor, which rejoined the index last March. The company rode the recovery of tourism, raised its annual objectives several times last year, held an investor day which was considered successful, given its credit rating raised by the agencies, and announced buybacks of actions. So a lot of good boxes have been ticked.

Let’s end with Alstom, which was expelled by Accor from the CAC 40 in March. Since then, its action has regained momentum (+46.6%) thanks to better results and a debt reduction plan which has not scalded the market. The group launched a capital increase of 1 billion euros last week which will allow it to clean up its balance sheet by reducing its debt by 2 billion euros. The action was also driven by brutal buybacks of “shorts” (a “short squeeze”), that is to say that short sellers unwound their positions, judging that the worst was now over for the equipment manufacturer railway on the Stock Exchange. “Alstom remains one of the most shorted stocks in Europe and we expect the short squeeze to continue as the group appears to be back on track in terms of cash flow dynamics and balance sheet structure”, Deutsche Bank wrote in early May.