Coface records a very good start to the year with a net income of
€61.2m
Coface records
a very good start to the year
with a net income of €61.2m
Paris, 25 May
2023 –
17.35
- Coface applied IFRS 17
and IFRS 9 accounting standards starting on
1 January 2023.
All comparisons are made using the 2022 pro forma
IFRS 17 figures presented on
27 April 2023
- Turnover:
€475m, up 11.4% at constant perimeter and FX
- Trade Credit insurance rose 10.9%
at constant FX, driven by increased client activity and growth in
fee and commission income (+12.8%)
- Client retention stood at record
highs (95.7%); the price effect was still negative (-1.5%) but less
so than Q4-22
- Information services rose 15.0% at
constant FX, while factoring climbed 13.1%
- Net loss ratio at 40.6%, up
by 0.3 ppt; net combined ratio at 66.3%,
improved by 1.7 ppt
(+10.3 ppts compared to Q1-22,
excluding the impact of government schemes)
- Gross loss ratio at 40.7%, up 9.2
ppts in a risk environment that is still slowly normalising
- Net cost ratio down by
2.1 ppts to 25.7% as a result of positive operating leverage,
an improved product mix and high reinsurance commissions
- Net income (group share) at
€61.2m, up 17.0% compared to
Q1-22
- Annualised
RoATE1 at
13.6%
- Payment of the 2022
dividend of €1.522 approved at
the General Meeting of 16 May 2023
Unless otherwise indicated, change comparisons
refer to the pro forma IFRS 17 results as at 31 March 2022
Xavier Durand, Coface’s Chief Executive
Officer, commented:“Coface maintained its growth trend
with an 11.4% increase in turnover and a record customer retention
rate. Other activities, including service revenues (information
sales, debt collection and fee and commission income) continued to
grow double digits, once again proving the solidity of Coface's
business model.While helping moderate inflation, ongoing monetary
tightening by the main central banks also revealed weaknesses in a
financial system that had become accustomed to very low rates.
Fears arising from the bankruptcies of US regional banks will
likely lead to a general reduction in the corporate credit
supply.The first quarter of 2023 is also the first to which the
IFRS 17 and IFRS 9 accounting standards were applied.
These standards did not cause any major changes to the assessment
of Coface's financial performance, which remains strong. Under this
new accounting framework, Coface posted a 17% increase in net
income to €61.2m and a net combined ratio of 66.3% for an
annualised return on tangible equity of 13.6%, above mid-cycle
targets. Lastly, following the general meeting of 16 May, a
dividend of €1.52 per share (which corresponds to 80% of our 2022
earnings) was paid on 24 May 2023.”
Key figures at 31 March
2023
The Board of Directors
of COFACE SA examined the summary consolidated financial statements
for the first three months (non-audited) during its meeting on 25
may 2023. The Audit Committee had previously reviewed them at its
meeting on 23 May 2023.
Income
statements items in €m |
Q1-22 |
Q1-23 |
Variation |
% ex. FX* |
Gross earned premiums |
359.2 |
395.3 |
+10.1% |
+10.9% |
Other
revenues |
68.8 |
79.8 |
+16.0% |
+13.9% |
REVENUE |
428.0 |
475.1 |
+11.0% |
+11.4% |
UNDERWRITING INCOME/LOSS AFTER REINSURANCE |
82.3 |
95.3 |
+15.9% |
+12.5% |
Investment
income, net of management expenses |
11.3 |
-2.6 |
(123.2)% |
(122.0)% |
Insurance
Finance Expenses |
(11.5) |
(2.4) |
(79.5)% |
(70.3)% |
CURRENT OPERATING INCOME |
82.0 |
90.4 |
+10.2% |
+5.8% |
Other
operating income / expenses |
(1.2) |
(0.3) |
(70.1)% |
(78.6)% |
OPERATING INCOME |
80.8 |
90.0 |
+11.4% |
+7.0% |
NET INCOME |
52.3 |
61.2 |
+17.0% |
+7.8% |
|
|
|
|
|
Key
ratios |
Q1-22 |
Q1-23 |
Variation |
Loss ratio net of reinsurance |
40.3% |
40.6% |
0.3 |
ppt |
Cost ratio net
of reinsurance |
27.8% |
25.7% |
(2.1) |
ppts |
COMBINED RATIO NET OF REINSURANCE |
68.1% |
66.3% |
(1.7) |
ppt |
|
|
|
|
|
Balance sheet items in €m |
2022 |
Q1-23 |
Variation |
Total Equity (group share) |
2,018.6 |
2,100.4 |
+4.1% |
|
* Also excludes scope impact
1. Turnover
Coface recorded a consolidated turnover of
€475.1m, up 11.4% at constant perimeter and FX compared to
Q1- 22. As reported (at current FX and perimeter), turnover
rose +11.0%.
Turnover from the insurance business (including
surety bonds and single risk) increased +10.9% at constant
perimeter and FX. Growth benefited from a sharp increase in
customer activity as well as a record retention level of 95.7%, up
+0.9% compared to Q1-22. New business totalled €32m, down €3m
compared to Q1-22 in an increasingly competitive market and
approaching pre-COVID levels.
The growth in Coface’s client activity had a
positive impact of +2.0% during Q1-23. This increase continues to
reflect the scale of the recent economic recovery and inflation,
but the pace of growth is now slowing (-2.4 ppts compared to
Q1-22). The price effect remained negative at -1.5% in Q1-23 but
improved compared to Q1-22 (- 2.7%). This decrease is largely
explained by a very low past claims experience and moderated by the
continued normalisation of the risk environment.
Turnover from non-insurance activities was up
+15.3% compared to Q1-22. All the business lines are experiencing
positive trends but at different scales. Turnover from factoring
rose +13.1%, mainly due to the increase in volumes refinanced in
Germany. Information services turnover rose +15.0%, maintaining its
growth trend. Fee and commission income (debt collection
commissions) increased +44.1% due to the increase in claims to be
collected. Commissions were up +12.8%.
Total revenue - in €m(by country of
invoicing) |
Q1-22 |
Q1-23 |
Variation |
% ex. FX3 |
Northern Europe |
94.7 |
102.2 |
+7.9% |
+7.2% |
Western Europe |
79.8 |
96.6 |
+21.1% |
+21.8% |
Central & Eastern Europe |
46.9 |
45.0 |
(4.1)% |
(4.6)% |
Mediterranean & Africa |
115.9 |
133.2 |
+14.9% |
+17.2% |
North America |
36.2 |
41.9 |
+15.8% |
+11.9% |
Latin America |
22.9 |
26.4 |
+15.5% |
+20.3% |
Asia
Pacific |
31.5 |
29.8 |
(5.5)% |
(6.6)% |
Total Group |
428.0 |
475.1 |
11.0% |
+11.4% |
In Northern Europe, turnover increased +7.2% at
constant FX and +7.9% at current FX. Credit insurance benefited
from client activity, despite the decrease in metal prices, and
from a high retention rate. Turnover from factoring and services
increased +15.5% and +44.6% respectively.
In Western Europe, turnover was up +21.8% at
constant FX (+21.1% at current FX) due to a high retention rate and
client activity.
In Central and Eastern Europe, turnover
decreased by -4.6% and -4.1% at current FX due to reduced exposure
to Russia and the decline in metal prices. Excluding Russia, growth
would be 1%. Factoring turnover increased by +2.0%.
In the Mediterranean and Africa region, which is
driven by Italy and Spain, turnover rose +17.2% and +14.9% at
current FX due to a high retention rate and client activity.
Commissions climbed by +20.8%.
In North America, turnover increased +11.9% at
constant FX and +15.8% as reported, driven mainly by improved
retention.
In Latin America, turnover was up +20.3% at
constant FX and +15.5% at current FX, driven by high retention and
the increase in client activity
In Asia-Pacific, turnover fell -6.6% at constant
FX and -5.5% at current FX. The slip in turnover was mainly a
result of the decline in activity due to exposure to the
information technology sector.
2. Result
The combined ratio net of reinsurance stood at
66.2% for Q1-23 (an improvement of 1.8 ppt year on year and
7.2 ppts compared to the previous quarter). This ratio was up
10.3 ppts compared to Q1-22, excluding the effect of the government
schemes.
(i) Loss ratio
The gross loss ratio stood at 40.7%, up 9.2 ppts
year on year. This reflects an increased claims frequency since
H1-21, with the number of claims close to pre-COVID levels, and the
return of relatively large claims, which nevertheless remain below
average. Reserve releases remain high.The Group’s reserving policy
remains unchanged. The amount of provisions relating to the
underwriting year, although discounted, remains in line with the
historical average. The rigorous management of past claims enabled
the Group to record 35.6 ppts of recoveries on previous years.
Releases from previous years no longer benefited as much from
COVID-related reserves.The net loss ratio rose to 40.6%, an
increase of 0.3 ppt compared to T1-22 (and up 10.7 ppts
compared to Q1-22, excluding the impact of government schemes).
(ii) Cost ratio
Coface follows a strict cost management policy.
In Q1-23, costs rose by +10.9% at constant perimeter and FX, and
+10.7% at current FX. Credit insurance costs were up 7.9%, which
was less than the increase in turnover, demonstrating good
operating leverage. The cost ratio before reinsurance stood at
29.4%, down 1.2 ppt year on year due to an improvement in the
product mix (commissions).
The cost ratio net of reinsurance was 25.7% in
Q1-23, an improvement of 2.1 ppts year on year.
Net financial income for the first quarter was
-€2.6m. This amount includes market value adjustments particularly
on real estate funds for -€12m, positive hedging results and a
currency effect of -€6.3m, which is mainly due to the application
of IAS 29 (hyperinflation) in Argentina and Turkey.
The portfolio’s current yield (i.e. excluding
capital gains, impairment and currency effects) was €14.6m, i.e. a
two-fold increase year on year. The accounting yield4, excluding
capital gains and fair value effect, was 0.5% in Q1-23. The return
on new investments remained above 2%.
- Operating income
and net income
Operating income for Q1-23 was €90.0m, up 11.4%
year on year, mainly due to increased turnover and a loss
experience that remained low.
The effective tax rate was 25%, compared to 31%
for Q1-22.
In total, net income (group share) stood at
€61.2m, up 17.0% compared to Q1-22.
3. Shareholders’
equity
At 31 March 2023, Group shareholders’ equity
stood at €2,100.4m, up €81.8m, i.e. +4.1% (compared
to €2,018.6m at 31 December 2022).
This change is mainly due to positive net income
of €61.2m, and positive adjustments to the fair value of
investments (€24.2m).
The annualised return on average tangible equity
(RoATE) was 13.6% in Q1-23.
4. Outlook
As expected, inflation continued to decline due
to the fall in commodity prices (particularly energy prices) and
the proactive measures taken by central banks. The many monetary
tightening measures in the main economic hubs have started making
their impact. However, the excellent state of the labour market
limited the negative consequences of this new policy. The
transmission of monetary policies to the economy is not immediate
and its full effect has yet to be observed.
One of the most visible consequences of this
tightening was the bankruptcy of a number of US banks due to a lack
of supervision and regulation. At this stage, the takeover of these
banks by stronger players has limited contagion. However, the other
regional banks are encouraged to reduce their commitments, which
could lead to a contraction in the credit supply available to
households and businesses.
Against this backdrop, the number of corporate
bankruptcies continued to rise, albeit at a more moderate pace than
expected.
Lower inflation has led to slowed growth in
trade credit insurance turnover. On the other hand, other
activities and in particular service revenues (information, debt
collection and fee and commission income) continued to grow in
double digits, improving Coface's product mix.
Conference call for financial
analysts
Coface’s results for 3M-2023 will be discussed
with financial analysts during the conference call on
Thursday 25 May at 18.00 (Paris time). Dial one of the
following numbers:
- By webcast:
Coface Q1-23 results - Webcast
- By telephone
(for the sell-side analyst): Coface Q1-23 results - conference
call
The presentation will be available (in English
only) at the following address:
http://www.coface.com/Investors/financial-results-and-reports
Appendix
Quarterly results
Income
statements items in €mquarterly
figures |
Q1-22 |
Q2-22 |
Q3-22 |
Q4-22 |
Q1-23 |
|
% |
% ex. FX* |
Gross earned premiums |
359.2 |
374.0 |
403.5 |
379.0 |
395.3 |
|
+10.1% |
+10.9% |
Other
revenues |
68.8 |
71.6 |
70.1 |
73.0 |
79.8 |
|
+16.0% |
+13.9% |
REVENUE |
428.0 |
445.6 |
473.5 |
452.0 |
475.1 |
|
+11.0% |
+11.4% |
UNDERWRITING INCOME (LOSS) AFTER
REINSURANCE |
82.3 |
109.5 |
84.9 |
72.0 |
95.3 |
|
+15.9% |
+12.5% |
Investment income, net of management expenses |
11.3 |
11.5 |
13.5 |
(0.6) |
(2.6) |
|
(123.2)% |
(122.0)% |
Insurance Finance Expenses |
(11.5) |
(10.4) |
(10.5) |
14.9 |
(2.4) |
|
(79.5)% |
(70.3)% |
CURRENT OPERATING INCOME |
82.0 |
110.6 |
87.9 |
86.2 |
90.4 |
|
+10.2% |
+5.8% |
Other
operating income / expenses |
(1.2) |
(3.2) |
(0.7) |
(4.1) |
(0.3) |
|
(70.1)% |
(78.6)% |
OPERATING INCOME |
80.8 |
107.4 |
87.3 |
82.1 |
90.0 |
|
+11.4% |
+7.0% |
NET INCOME |
52.3 |
82.5 |
51.0 |
54.6 |
61.2 |
|
+17.0% |
+7.8% |
Income tax
rate |
31.0% |
19.3% |
32.8% |
25.5% |
25.5% |
|
-5.5 ppts. |
Cumulated results
Income
statements items in €mcumulated
figures |
Q1-22 |
H1-22 |
9M-22 |
2022 |
Q1-23 |
|
% |
%ex. FX* |
Gross earned premiums |
359.2 |
733.2 |
1,136.6 |
1,515.7 |
395.3 |
|
+10.1% |
+10.9% |
Other
revenues |
68.8 |
140.4 |
210.4 |
283.4 |
79.8 |
|
+16.0% |
+13.9% |
REVENUE |
428.0 |
873.5 |
1,347.0 |
1,799.0 |
475.1 |
|
+11.0% |
+11.4% |
UNDERWRITING INCOME (LOSS) AFTER
REINSURANCE |
82.3 |
191.8 |
276.7 |
348.6 |
95.3 |
|
+15.9% |
+12.5% |
Investment income, net of management expenses |
11.3 |
22.8 |
36.3 |
35.7 |
(2.6) |
|
(123.2)% |
(122.0)% |
Insurance Finance Expenses |
(11.5) |
(21.9) |
(32.4) |
(17.6) |
(2.4) |
|
(79.5)% |
(70.3)% |
CURRENT OPERATING INCOME |
82.0 |
192.6 |
280.5 |
366.8 |
90.4 |
|
+10.2% |
+5.8% |
Other
operating income / expenses |
(1.2) |
(4.3) |
(5.0) |
(9.1) |
(0.3) |
|
(70.1)% |
(78.6)% |
OPERATING INCOME |
80.8 |
188.3 |
275.5 |
357.7 |
90.0 |
|
+11.4% |
+7.0% |
NET INCOME |
52.3 |
134.8 |
185.8 |
240.4 |
61.2 |
|
+17.0% |
+7.8% |
Income tax
rate |
31.0% |
24.3% |
26.8% |
26.5% |
25.5% |
|
-5.5
ppts. |
* Also excludes scope impact
CONTACTS
ANALYSTS / INVESTORSThomas
JACQUET: +33 1 49 02 12 58 – thomas.jacquet@coface.comBenoît
CHASTEL: +33 1 49 02 22 28 – benoit.chastel@coface.com
MEDIA RELATIONSSaphia GAOUAOUI:
+33 1 49 02 14 91 – saphia.gaouaoui@coface.comCorentin HENRY: +33 1
49 02 23 94 – corentin.henry@coface.com
FINANCIAL CALENDAR
2023(subject to
change)H1-2023 results: 10 August 2023 (after market
close)9M-2023 results: 14 November 2023 (after market close)
FINANCIAL INFORMATIONThis press
release, as well as COFACE SA’s integral regulatory information,
can be found on the Group’s
website:http://www.coface.com/Investors
For regulated information on Alternative
Performance Measures (APM), please refer to our Interim Financial
Report for H1-2022 and our 2022 Universal Registration Document
(see part 3.7 “Key financial performance indicators”).
|
Regulated
documents posted by COFACE SA have been secured and authenticated
with the blockchain technology by Wiztrust. You can check the
authenticity on the website www.wiztrust.com. |
COFACE: FOR TRADEWith over 75 years of
experience and the most extensive international network, Coface is
a leader in trade credit insurance & risk management, and a
recognized provider of Factoring, Debt Collection, Single Risk
insurance, Bonding, and Information Services. Coface’s experts work
to the beat of the global economy, helping ~50,000 clients in 100
countries build successful, growing, and dynamic businesses. With
Coface’s insight and advice, these companies can make informed
decisions. The Group' solutions strengthen their ability to sell by
providing them with reliable information on their commercial
partners and protecting them against non-payment risks, both
domestically and for export. In 2022, Coface employed ~4,720 people
and registered a turnover of €1.81
billion. www.coface.com COFACE SA is quoted in
Compartment A of Euronext ParisCode ISIN: FR0010667147 / Mnémonique
: COFA |
DISCLAIMER - Certain declarations featured in
this press release may contain forecasts that notably relate to
future events, trends, projects or targets. By nature, these
forecasts include identified or unidentified risks and
uncertainties, and may be affected by many factors likely to give
rise to a significant discrepancy between the real results and
those stated in these declarations. Please refer to chapter 5 “Main
risk factors and their management within the Group” of the Coface
Group's 2022 Universal Registration Document filed with AMF on 6
April 2023 under the number D.23-0244 in order to obtain a
description of certain major factors, risks and uncertainties
likely to influence the Coface Group's businesses. The Coface Group
disclaims any intention or obligation to publish an update of these
forecasts, or provide new information on future events or any other
circumstance.
1 Return on average tangible equity2 The proposed payment was
approved at the General Shareholders’ Meeting on 16 May 2023. The
ex-dividend date and payment of the dividend took place on 22 and
24 May 2023 respectively.3 Also excludes scope impact4 Book yield
calculated on the average of the investment portfolio excluding
non-consolidated subsidiaries.
- 2023 05 25 PR results 3M-2022 COFACE
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