Coface SA: confirms its very good start to the year with a net
income of €142.3m, up 10%
Coface confirms its very good start to the year with a net
income of €142.3m, up 10%
Paris, 5 August 2024 –
17.35
- Turnover: €923m, down -3.1%
at constant FX and perimeter
- Credit insurance premiums down
-5.3%; client activity remains slightly negative
- Client retention still high (92.8%)
but down from 2023 record; pricing effect remained negative (-1.4%)
in line with historical trends
- Renewed double-digit growth in
information services (+16.9% at constant FX) and debt collection
(+20.3% vs. a low base); factoring down -2.6% but up 1.0% in
Q2
- Net loss ratio at 35.0%,
improved by 5.3 ppts; net combined ratio at 63.4%, improved by
3.2 ppts
- Gross loss ratio at 32.5%, improved
by 6.9 ppts with stable opening reserving and high reserve
releases
- Net cost ratio up by 3.2 ppts to
28.4%, reflecting lower revenues, offset by a better product mix,
while we continue to invest
- Net income (group share) at
€142.3m, including €73.8m for Q2-24 and annualised
RoATE1 at
15.3%
- Estimated solvency ratio at
195%2, above the
target range (155%-175%)
Unless otherwise indicated, change comparisons
refer to the results as at 30 June 2023
Xavier Durand, Coface’s Chief Executive
Officer, commented:
“Our results reflect the disciplined execution of our strategy
and a still sluggish economic environment. The continuing decline
in inflation and the lack of a rebound in our clients’ activities
are reflected in a fall in our insurance revenues of 5.3%, from a
record high comparison basis.
In line with our strategic priorities, our service revenues
(information services, debt collection) once again recorded
double-digit growth, limiting the decline in our overall turnover
to 3.1%.
Our combined ratio was resilient at 63.4%, an excellent level,
due to our successful risk management. We benefited from the past
rise in interest rates to record an increase in financial
income.
Our net income rose once again, to €142.3m, which corresponds
to a return on average tangible equity of 15.3%, well above our
mid-cycle targets.
Our solvency ratio remains very high, at 195%, which provides
our clients with a high level of security while enabling us to
seize growth opportunities as they arise.”
Key figures at 30 June 2024
The Board of Directors
of COFACE SA examined the consolidated financial statements at 30
June 2024 at its meeting of 5 August 2024. The Audit Committee at
its meeting on 2 August 2024 also previously reviewed them. These
interim consolidated financial statements have been subject to
limited review by the statutory auditors. The limited review report
is being issued.
| Income
statements items in €m |
H1-23 |
H1-24 |
Variation |
% ex. FX* |
|
Gross earned premiums |
803.1 |
754.3 |
(6.1)% |
(5.3)% |
| Other
revenues |
156.6 |
168.5 |
+7.6% |
+7.9% |
|
REVENUE |
959.7 |
922.7 |
(3.8)% |
(3.1)% |
|
UNDERWRITING INCOME/LOSS AFTER REINSURANCE |
198.8 |
195.0 |
(1.9)% |
(0.5)% |
Investment income, net of management expenses,
excluding finance costs |
1.4 |
40.8 |
+2,779% |
+2,521% |
|
Insurance Finance Expenses |
-14.7 |
-18.1 |
+22.8% |
+33.0% |
|
CURRENT OPERATING INCOME |
185.5 |
217.7 |
+17.3% |
+15.4% |
| Other
operating income / expenses |
-0.7 |
-0.5 |
(26.1)% |
(23.3)% |
|
OPERATING INCOME |
184.8 |
217.2 |
+17.5% |
+15.6% |
|
NET INCOME (GROUP SHARE) |
128.8 |
142.3 |
+10.4% |
+7.3% |
| |
|
|
|
|
| Key
ratios |
H1-23 |
H1-24 |
Variation |
|
Loss ratio net of reinsurance |
40.3% |
35.0% |
(5.3) |
ppts |
| Cost ratio net
of reinsurance |
25.2% |
28.4% |
3.2 |
ppts |
|
COMBINED RATIO NET OF REINSURANCE |
65.5% |
63.4% |
(2.1) |
ppts |
| |
|
|
|
|
|
Balance sheet items in €m |
2023 |
H1-24 |
Variation |
| Total equity
(group share) |
2,050.8 |
2,002.9 |
(2.3)% |
|
|
| |
H1-23 |
H1-24 |
|
|
|
Solvency ratio |
192%1 |
195%1 |
+3 |
ppts |
* Also excludes scope impact
1 This estimated solvency ratio constitutes
a preliminary calculation made according to Coface’s
interpretation of Solvency II regulations and using the Partial
Internal Model. The final calculation may differ from this
preliminary calculation. The estimated solvency ratio is not
audited.
1. Turnover
In the first half of the year, Coface recorded a
consolidated turnover of €922.7m, down -3.1% at constant perimeter
and FX compared to H1-23. As reported (at current FX and
perimeter), turnover was down -3.8%.
Revenues from insurance activities (including
bonding and Single Risk) were down by -5.3% at constant FX and
perimeter due to a decline in inflation and the absence of a
rebound in client activities. Client retention remains high at
92.8% (down -1.6% on H1-23), in a competitive market where Coface
implemented risk mitigation plans. Buoyed by an increase in demand
and the positive effects of investments for growth, new business
rose to €69m, up €6m compared to H1-23.
Client activities have not returned to growth
and were slightly negative over the first half of the year (-0.1%).
The price effect remained negative at -1.4% in H1-24, in line with
long-term trends. This is largely due to very low past losses
offset by the current normalisation environment.
Turnover from non-insurance activities was up
+7.9% compared to H1-23. Factoring turnover was down by -2.6% over
the first half of the year. However, it increased by 1.0% in Q2-24.
Information services turnover rose +16.9%. Fee and commission
income (debt collection commissions) increased by +20.3%, from a
low base, due to the increase in claims to be collected.
Commissions were up +8.9%.
Total revenue - in €m
(by country of invoicing) |
H1-23 |
H1-24 |
Variation |
% ex. FX3 |
|
Northern Europe |
200.1 |
185.0 |
(7.5)% |
(7.5)% |
|
Western Europe |
194.3 |
187.6 |
(3.4)% |
(3.8)% |
|
Central and Eastern Europe |
91.1 |
87.0 |
(4.5)% |
(7.3)% |
|
Mediterranean & Africa |
267.0 |
276.0 |
+3.4% |
+6.0% |
|
North America |
85.4 |
88.7 |
+3.8% |
(6.9)% |
|
Latin America |
54.5 |
38.2 |
(29.9)% |
(7.8)% |
| Asia
Pacific |
67.3 |
60.2 |
(10.6)% |
(9.4)% |
|
Total Group |
959.7 |
922.7 |
(3.8)% |
(3.1)% |
In Northern Europe, turnover was down by -7.5%
at constant and current FX. The region was hit by a slowdown in
client activities and the selective non-renewal of some loss-making
policies. This decline was partially offset by the growth in
adjacent activities. Factoring revenues were down -1.5%, an
improvement compared to the previous quarter.
In Western Europe, turnover was down by -3.8% at
constant FX (-3.4% at current FX). The slowdown in client
activities was partially offset by the rise in information
sales.
In Central and Eastern Europe, turnover fell
-7.3% at constant FX (-4.5% at current FX) due to the decline in
client activities, which weighed on credit insurance. Factoring was
down -6.9% at constant exchange rates.
In the Mediterranean and Africa region, which is
driven by Italy and Spain, turnover rose +6.0% at constant FX and
+3.4% at current FX on the back of robust sales in credit insurance
and services and a stronger economic environment.
In North America, turnover was down -6.9% at
constant FX but increased by +3.8% at current FX due to the
integration of Mexico. The region saw a slowdown in client
activities despite higher retention.
In Latin America, turnover fell by -7.8% at
constant FX and -29.9% at current FX. The region was hit by a
decline in client activities, mainly in commodities and metals, and
the transfer of Mexico to the North America region.
In Asia-Pacific, turnover decreased by -9.4% at
constant FX and -10.6% at current FX, due to a slowdown in client
activities.
2. Result
The combined ratio net of reinsurance stood at
63.4% for H1-24 (an improvement of 2.1 ppts year on year and almost
flat against the previous quarter).
(i) Loss ratio
The gross loss ratio stood at 32.5%, a 6.9-ppt
improvement on the first half of the previous year. This
improvement reflects the gradual normalisation of the loss
experience, offset by high reserve releases. The number of
mid-sized claims increased but remains below long-term trends.
The Group’s provisioning policy remained
unchanged. The amount of provisions related to the underwriting
year, although discounted, remained in line with the historical
average. Strict management of past claims enabled the Group to
record 44.4 ppts of recoveries.
The net loss ratio improved by 5.3 ppts compared
to H1-23, at 35.0%.
(ii) Cost ratio
Coface is pursuing a strict cost management
policy while maintaining its investments, in line with the Power
the Core strategic plan. In H1-24, costs rose by +6.5% at constant
perimeter and FX, and +6.3% at current FX.
The cost ratio net of reinsurance was 32.6% in
H1-24, up 3.0 ppts year on year. This rise was mainly due to
the decline in revenues (1.0 ppt), embedded cost inflation
(1.9 ppts) and ongoing investments (1.6 ppts). In
contrast, the improved product mix (information services, debt
collection and fee and commission income) had a positive effect of
1.5 ppts. High reinsurance commissions explain the remainder
of the variation.
Net financial income was +€40.8m over the first
half of the year. This amount includes realised capital gains
(+€10.1m), which more than offset negative market value adjustments
on investments (-€4.2m) and an FX effect of -€7.0m, mostly due to
the rise in the euro against most other currencies in which the
Group does business.
The portfolio’s current yield (i.e. excluding
capital gains, depreciation and FX) was €48.0m. The accounting
yield4, excluding capital gains and fair value effect,
was 1.5% in H1-24. The yield on new investments was 4.5%.
Insurance Finance Expenses (IFE) stood at €18.1m
for the first half due to higher discount rates and higher loss
reserves.
- Operating income
and net income
Operating income amounted to €217.2m in H1-24,
up 17.5%.
The effective tax rate was 27% over the first
half of the year (vs. 24% for H1-23).
In total, net income (group share) was €142.3m,
up 10.4% compared to the first half of 2023.
3. Shareholders’
equity
As of 30 June 2024, Group shareholders’ equity
stood at €2,002.9m, down €47.8m, or -2.3% (compared
to €2,050.8m at 31 December 2023).
These changes are mainly due to the positive net
income of €142.3m and the dividend payment of -€194.3m. Other items
such as changes in unrealised capital gains had only a minor
impact.
The annualised return on average tangible equity
(RoATE) was 15.3% at 30 June 2024, mainly due to the improvement in
financial income.
The solvency ratio stood at 195%5, up
3 points compared to H1-23. It remains well above the upper end of
the target range (155%-175%).
4. Outlook
Coface has slightly raised its global growth
forecast to 2.5% for 2024, and expects 2.7% in 2025. China and the
United States continue to post moderate growth, offset by the
performance of some emerging countries. These figures are
substantially lower than the pace of growth recorded over the past
decade.
On inflation, the rebalancing of the labour
market in the United States is good news after the significant
tensions caused by labour shortages. However, persistent moderate
inflation confirms that it will be very difficult to bring
inflation back in line with central bank targets. The target of 2%
will only be attainable at the cost of a decline in the labour
market or companies’ operating margins, with the risk of a renewed
increase in company failures.
Political risk remains higher than ever with
many elections still to come and several conflicts that have
potential to take a turn for the worse. The surprise dissolution of
the National Assembly in France has put decisions on hold, which is
bad news for economic activity as Paris hosts the Olympic Games,
which will provide a temporary boost.
The US presidential election remains the major
political event for the end of the year and has already brought a
run of surprises.
In this environment of continued uncertainty and
with a modest growth outlook, Coface continues to implement its
Power the Core strategic plan. The first half of 2024 marked an
excellent start to this plan, with most key performance indicators
positive.
Conference call for financial
analysts
Coface’s H1-2024 results will be discussed with
financial analysts during the conference call on Monday 5 August at
18.00 (Paris time). Dial one of the following numbers:
- By webcast:
Coface H1-2024 results - Webcast
- By telephone
(for sell-side analysts): Coface H1-2024 results - Conference
call
The presentation will be available (in English
only) at the following address:
http://www.coface.com/Investors/financial-results-and-reports
Appendices
Quarterly results
Income
statements items in €m
Quarterly figures |
Q1-23 |
Q2-23 |
Q3-23 |
Q4-23 |
Q1-24 |
Q2-24 |
|
% |
%
ex. FX* |
|
Insurance revenue |
395.3 |
407.8 |
384.7 |
371.3 |
378.6 |
375.6 |
|
(7.9)% |
(7.2)% |
| Other
revenues |
79.8 |
76.8 |
73.4 |
79.2 |
85.0 |
83.4 |
|
+8.7% |
+8.8% |
|
REVENUE |
475.1 |
484.5 |
458.1 |
450.4 |
463.7 |
459.1 |
|
(5.3)% |
(4.6)% |
UNDERWRITING INCOME (LOSS)
AFTER REINSURANCE |
95.3 |
103.5 |
91.2 |
105.4 |
100.3 |
94.7 |
|
(8.5)% |
(6.9)% |
Investment income, net of management expenses,
excluding finance costs |
(2.6) |
4.0 |
13.0 |
(2.0) |
17.9 |
22.8 |
|
+467.5% |
+431.8% |
|
Insurance Finance Expenses |
(2.4) |
(12.3) |
(15.4) |
(9.9) |
-11.4 |
-6.7 |
|
(46.1)% |
(41.7)% |
|
CURRENT OPERATING INCOME |
90.4 |
95.2 |
88.9 |
93.5 |
106.8 |
110.9 |
|
+16.5% |
+16.1% |
| Other
operating income / expenses |
(0.3) |
(0.4) |
(0.2) |
(4.0) |
-0.1 |
-0.5 |
|
+23.0% |
+25.2% |
|
OPERATING INCOME |
90.0 |
94.8 |
88.6 |
89.5 |
106.8 |
110.4 |
|
+16.5% |
+16.1% |
|
NET INCOME (GROUP SHARE) |
61.2 |
67.7 |
60.9 |
50.8 |
68.4 |
73.8 |
|
+9.1% |
+9.2% |
| Income tax
rate |
25.5% |
21.9% |
24.2% |
36.0% |
27.2% |
26.8% |
|
+4.8 ppts |
Cumulated results
Income
statements items in €m
Cumulated figures |
Q1-23 |
H1-23 |
9M-23 |
2023 |
Q1-24 |
H1-24 |
|
% |
%
ex. FX* |
|
Insurance revenue |
395.3 |
803.1 |
1,187.8 |
1,559.1 |
378.6 |
754.3 |
|
(6.1)% |
(5.3)% |
| Other
revenues |
79.8 |
156.6 |
230.0 |
309.2 |
85.0 |
168.5 |
|
+7.6% |
+7.9% |
|
REVENUE |
475.1 |
959.7 |
1,417.8 |
1,868.2 |
463.7 |
922.7 |
|
(3.8)% |
(3.1)% |
UNDERWRITING INCOME (LOSS)
AFTER REINSURANCE |
95.3 |
198.8 |
290.0 |
395.4 |
100.3 |
195.0 |
|
(1.9)% |
(0.5)% |
Investment income, net of management expenses,
excluding finance costs |
(2.6) |
1.4 |
14.5 |
12.4 |
17.9 |
40.8 |
|
+2,779% |
+2,520,5% |
|
Insurance Finance Expenses |
(2.4) |
(14.7) |
(30.1) |
(40.0) |
(11.4) |
(18.1) |
|
+22.8% |
+33.0% |
|
CURRENT OPERATING INCOME |
90.4 |
185.5 |
274.4 |
367.9 |
106.8 |
217.7 |
|
+17.3% |
+15.4% |
| Other
operating income / expenses |
(0.3) |
(0.7) |
(0.9) |
(5.0) |
(0.1) |
(0.5) |
|
(26.1)% |
(23.3)% |
|
OPERATING INCOME |
90.0 |
184.8 |
273.4 |
362.9 |
106.8 |
217.2 |
|
+17.5% |
+15.6% |
|
NET INCOME (GROUP SHARE) |
61.2 |
128.8 |
189.7 |
240.5 |
68.4 |
142.3 |
|
+10.4% |
+7.3% |
| Income tax
rate |
25.5% |
23.7% |
23.8% |
26.8% |
27.2% |
27.0% |
|
+3.3 ppts |
|
* Also excludes scope impact
CONTACTS
ANALYSTS / INVESTORS
Thomas JACQUET: +33 1 49 02 12 58 – thomas.jacquet@coface.com
MEDIA RELATIONS
Saphia GAOUAOUI: +33 1 49 02 14 91 – saphia.gaouaoui@coface.com
Adrien BILLET: +33 1 49 02 23 63 – adrien.billet@coface.com
FINANCIAL CALENDAR 2024
(subject to change)
9M-2024 results: 5 November 2024 (after market close)
FINANCIAL INFORMATION
This 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 H1-2024 and our 2023 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 TRADE
With 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 around 100,000 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
2023, Coface employed ~4,970 people and registered a turnover of
€1.87 billion.
www.coface.com
COFACE SA is quoted in Compartment A of Euronext Paris
Code ISIN: FR0010667147 / Ticker: 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 2023 Universal Registration Document filed with AMF on 5
April 2024 under the number D.24-0242 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 equity
2This estimated solvency ratio is a preliminary calculation
made according to Coface’s interpretation of Solvency II
regulations and using the Partial Internal Model. The final
calculation may differ from this preliminary calculation. The
estimated solvency ratio is not audited.
3 Also excludes scope impact
4 Book yield calculated on the average of the investment
portfolio excluding non-consolidated subsidiaries.
5This estimated solvency ratio is a preliminary calculation
made according to Coface’s interpretation of Solvency II
regulations and using the Partial Internal Model. The final
calculation may differ from this preliminary calculation. The
estimated solvency ratio is not audited.
- 2024 08 05 PR results H1-2024 COFACE
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