CAB Payments Holdings PLC (LSE:CABP) shares nosedived 60% in early trading after the company warned that revenues and profits would be lower than expected as trading volumes and profit margins were being reduced in key African currencies.
Revenues for 2023 are now expected to be around 17% below previously issued guidance, the business-to-business cross-border payments and foreign exchange group said, although that will still be at least 20% ahead of the £109.4 million made last year.
Lower volumes and margins were blamed on changes in “a number” of markets, most notably Central African franc (XAF) and West African franc (XOF), which together are used by 14 countries, while “ongoing uncertainties” surrounding the Nigerian naira were also noted.
“These challenges are recent but continuing, and coincide with the traditionally strong fourth quarter (Q4) for both of these corridors; it is unclear when and to what extent conditions in these markets may improve,” said the company, one of the few to IPO in London this year.
CAB, which raised £292 million when it floated in July, said it will cut costs and carry out efficiency measures to try and lessen the impact, but the bottom line will be hit as directors remain confident about medium-term prospects and do not want to hamper potential growth.
“The company has signed 74 new customers and is confident these customers will deliver good growth into the future,” it said.
Shares in the company crashed to 86.50p in early trading, down from the 216.5p closing price the day before and an IPO price of 335p three and a half months ago.