Tech

Payments firm Wirecard confirms profit target for 2019 after SoftBank deal

Key Points
  • Wirecard says it expects to post EBITDA of between 740 million and 800 million euros this year.
  • Its report comes on the heels of an announcement that SoftBank will invest $1 billion in the company.
  • The fintech firm was the subject of controversy earlier this year amid reports of fraud and false accounting.
An illuminated logo sits on the exterior of Wirecard's headquarters in the Aschheim district of Munich, Germany.
Michaela Handrek-Rehle | Bloomberg | Getty Images

Wirecard confirmed its profit target for 2019 Thursday, a day after the German payments group announced an incoming $1 billion capital injection from SoftBank.

The firm's operating earnings before interest, tax, depreciation and amortization (EBITDA) rose almost 37% year-on-year to 560.5 million euros ($625.2 million) in 2018. Consolidated revenues for the year increased by over 35% to 2.02 billion euros.

That's slightly down from preliminary results posted in late January, which had put the company's earnings for the year at 568.3 million euros and revenues at 2.1 billion euros.

But Wirecard says it expects to post EBITDA of between 740 million euros and 800 million euros this year. Shares of the company rose 2% in morning trade.

"I think we're very enthusiastic, we're looking into a great year and I can also say we started into the year in a very robust and strong way," Wirecard CEO Markus Braun told CNBC's "Squawk Box Europe.

Latest FT allegations 'not true'

Wirecard became the subject of controversy earlier this year after a series of media reports on fraud and false accounting allegations at the firm's Singapore office. Its 2018 report had been delayed by investigations into the allegations.

Reporting from the Financial Times led to a sell-off in the company's shares which at one point got so severe the German financial regulator stepped in and halted short selling in Wirecard stock.

Germany's Federal Financial Supervisory Authority has since filed a complaint against two of the FT's journalists and a number of short sellers, and recently lifted the ban on Wirecard shorts.

Wirecard meanwhile has sued the newspaper over its reporting, while an outside law firm investigating the fraud claims also cleared the firm's head office of any wrongdoing.

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However, the FT doesn't seem to have held off from its probe into Wirecard's accounting processes.

It reported on Wednesday that the accounts of the firm's largest business, CardSystems Middle East, were not audited from 2016 to 2017. The newspaper also claimed, citing documents, that almost all Wirecard's reported profits came from three partner companies and that much of those profits were booked through CardSystems.

Braun said the latest allegations from the FT were "not true."

"Of course all subsidiaries are audited to present very strong results and these companies that are mentioned do not represent the majority of profits," he said.

He added: "I think we want to leave all of that behind, we see it as, a little bit, as market speculation ... We really think that today is a turning point."

SoftBank deal

The fintech firm's report also comes on the heels of an announcement that SoftBank will invest 900 million euros in the company in exchange for an almost 6% stake.

The deal — which sees Wirecard issue five-year convertible bonds to be sold exclusively to SoftBank — will help the company expand into Japan and South Korea. It will also see the two working together on digital payments.

Speaking about the deal Thursday, Braun said: "We definitely think that this partnership can bring us, together with our own organic strategy, to the next level."