COFACE SA launches Power the Core, its 2024-2027 strategic plan
with a view to develop a global ecosystem of reference for credit
risk management
COFACE SA launches Power the Core, its
2024-2027 strategic plan with a view to develop a global ecosystem
of reference for credit risk management
Paris, 4 March 2024 – 18.15
- Power the Core will build
upon the successes of the previous strategic plans. Coface has laid
strong foundations which will support its development. It has
indeed:
- Built a best in industry risk
infrastructure
- Developed a high-performance sales
organisation in key markets
- Simplified its operating model
- Established Business Information
services (BI) foundations
- Defined a clear Corporate Social
Responsibility roadmap
- Nurtured a strong leadership
culture
- The new plan will deepen
and broaden the quality of Coface’s franchise. Its targets are, in
particular, to:
- Reach data and technology
excellence
- Deepen and broaden Coface’s
historical Trade Credit Insurance (TCI) franchise
- Grow profitably Business
Information services at double digit growth rate
- Leverage its unique culture of a
human-sized multinational with a strong commitment to
sustainability
- Coface, again, raises its
through-the-cycle financial targets:
- An undiscounted combined
ratio at ~78% through-the-cycle, a 2 ppts improvement
compared to Build to Lead
- A RoATE of 11.0%
through-the-cycle, an increase of 1.5 pt at the
current level of interest rate environment
- A solvency ratio towards
the upper end of the 155%-175% target range with a payout ratio of
at least 80%
- An additional contribution
from Business Information services to group RoATE of 50bp starting
in 2027
Xavier Durand, Coface’s Chief Executive
Officer, commented:“The numerous successes of our
strategic plans Fit to Win and Build to Lead have built solid
foundations for Coface. We have demonstrated that our businesses
complement each other, allowing for the development of a credit
risk management ecosystem of reference to increase our value
proposition to our customers. Our new plan Power the Core aims at
building upon our strengths and our employees’ commitment and
expertise in order to accelerate our transformation. We will in
particular deliberately invest in data and technology, for our
Trade Credit Insurance and our Business Information services. We
will further reinforce our leadership in credit insurance while
pursuing a double-digit profitable growth in information
services.In order to reach these ambitious targets, we will
leverage our unique culture of a human-sized multinational,
dedicated to its clients and deeply committed to our
responsibilities in sustainability matters.We are again upgrading
our through-the-cycle financial targets and are now targeting an
additional positive 50bp contribution from Business Information
services to the group RoATE starting in 2027.Our employees’ and
partners’ commitment will be, like for our previous plan a critical
pillar of our collective success at the service of our
clients.”
1. Strong foundations:
Build to Lead has met or exceeded all of its targets
Our Build to Lead plan was presented in February
2020. Its execution happened in a particularly shaky environment:
pandemic, inflation outbreak, brutal rise in interest rates, war
coming back in Europe. Coface has stuck with its strategic
direction and was able to rely on its agility to reach or exceed,
all of its plan’s targets.
Beyond the financial targets, Coface has
simplified its operating model, notably by reducing the number of
IT systems by 40% and by decreasing its IT complexity index by
25%.
Over the 2020-2023 period, Coface’s combined
ratio was significantly reduced and reached 69.1% on average, a
level well below the Build to Lead target and at the best level in
the industry. The cost ratio constantly decreased while the loss
ratio benefited from past investments in the risk management
infrastructure.
Revenues grew on average by 6% per annum,
supported by a record retention and by our clients’ turnover
growth.
Over the last 4 years, return on average
tangible equity was 10.8%, above the 9.5% target.
Finally, despite the numerous shocks, be it
economic, financial, or political, Coface’s solvency has constantly
remained above its target range which permitted to Coface to be in
2020 one of the very first European insurance companies to restart,
with a share buyback, returns to shareholders.
In 2019, the Business Information services were
still relatively immature. Since then, they pursued their
development and confirmed their growth potential. This activity has
strong synergies with Trade Credit Insurance and relies on the same
risk infrastructure. It is currently profitable despite significant
growth investments. The growth of this pure service activity, which
requires no regulatory capital, reached 13% on average between 2019
and 2023.
2. Power the Core aims
at developing a global credit risk management ecosystem of
reference
Coface’s conviction is intact: Trade Credit
Insurance is a service business which exhibits high barriers to
entry, is growing and among which Coface has built the best risk
infrastructure in the market. The latter relies on proprietary data
and scores, a global reach, a worldwide technology platform, a
through-the-cycle underwriting experience, a robust regulatory and
legal set up and a strong balance sheet.
Our strategic plan Power the Core will thus,
relying on these strong foundations, broaden and deepen Coface’s
franchises. In particular, it will:
- Invest
deliberately in data and technology to build new
differentiating data and scoring capabilities, integrating the most
modern modelling techniques, data science and artificial
intelligence in particular. Investments will be specifically
oriented towards technology and connectivity for the benefit of our
clients.
- Deepen
and broaden our TCI franchise. Risk underwriting will
remain disciplined while we will continue to invest for growth,
especially on the SME and Mid-market segments, and deliver on the
simplification of the customer experience.
- Pursue
profitable double-digit growth in Business Information
services. We will invest to keep building sales teams with
consistency, broaden data sourcing, expand use cases, and upgrade
IT platforms.
-
Leverage Coface’s unique culture. We will further
enhance attractive employer value proposition and deliver on our
CSR commitments.
3. Power the Core will
give Coface ambitious financial targets for 2027 and
beyond
The rigorous execution of the strategic plan
will allow Coface to reach its improved through-the-cycle financial
targets:
- An undiscounted
combined ratio of ~78% through-the-cycle, a 2 ppts improvement
compared to the previous plan
- A return on
average tangible equity of 11.0% through-the-cycle. This target is
valid at the current level of interest rate environment
- A solvency ratio towards the upper
end of the 155%-175% target range with a payout ratio of at least
80% of net income
- An additional
contribution from Business Information services to group RoATE of
50bp starting in 2027
Webcast:
The strategic plan will be presented on 5 March
2024 at 09.00am (Paris time) and available as a webcast at the
following link:
-
Webcast: Coface - strategic plan "Power the Core"
The presentation will be available at 08.30am on
5 March 2024 (in English only) at the following address:
http://www.coface.com/Investors/financial-results-and-reports
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.comAdrien BILLET: +33 1
49 02 23 6394 – adrien.billet@coface.com
FINANCIAL CALENDAR
2023/2024(subject to change)Q1-2024
results: 6 May 2024 (after market close)Annual General
Shareholders’ Meeting 2023: 16 May 2024H1-2024 results: 5 August
2024 (after market close)9M-2024 results: 5 November 2024 (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 H1-2023 and our 2022 Universal Registration Document
(see part 3.7 “Key financial performance indicators”).
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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 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 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.
- 2024 03 04 PR Power the Core - vision 2027 - COFACE SA
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