Coface confirms its very good start to the year with first-half net
income of €128.8m. Annualised return on tangible equity at 14.3%
Coface confirms its very
good start to the year with first-half net
income of €128.8m. Annualised return on tangible equity at
14.3%
Paris, 10 August 2023 –
17.35
- Turnover for the first half
of the year: €960m, up 11.1% at constant FX and perimeter and 9.9%
on a reported basis
- Trade credit insurance rose +11.2%
at constant FX, driven by increased client activity and growth in
fee and commission income (+11.3%)
- Client retention stood at a record
high (94.4%); the price effect was still negative (-2.0%) but less
so than in H1-22
- Business information momentum
continues with double-digit growth (+14.8% at constant FX);
factoring up by +5.4%, reflecting clear economic slowdown in
Germany and Poland
- Net loss ratio at 40.3% in
H1-23, up by 3.8 ppts; net combined ratio at 65.5%, up by
2.2 ppts (and +8.3 ppts compared to H1-22, excluding the
impact of government schemes)
- Gross loss ratio at 39.4%, up 7.4
ppts in a risk environment that is still normalising
- Net cost ratio down by 1.6 ppt
to 25.2% as a result of an improved product mix and high
reinsurance commissions, while investments continue
- Net income (group share) at
€128.8m, including €67.7m for Q2-23; annualised
RoATE1 at 14.3%
- Estimated solvency ratio at
192%2
above the target range (155% - 175%)
Unless otherwise indicated, change comparisons
refer to the pro forma IFRS 17 results as at 30 June 2022.
Xavier Durand, Coface’s Chief Executive
Officer, commented:“In the first half of the year,
Coface’s turnover grew by 11.1%, against a backdrop of falling
commodity prices with lower energy prices easing, at least
temporarily, inflationary pressures. With economic growth still
weak particularly in China and Europe, and rising financing costs,
the financial health of many companies is deteriorating. Since the
beginning of the year, Coface, in close collaboration with its
customers, has thus significantly stepped up its preventive actions
on its risk portfolio.Over the past quarter, Coface’s results
amounted to €68m, a high level reflecting our proactive management
of an increasing loss environment and tight cost control. Combined
ratio for the quarter stands at 65.5% under the new IFRS 17
accounting standards.Our strong performance is also reflected in
the growth of services, such as business information, which
recorded another quarter of double-digit increase (+14.8% during
the first semester). All these elements have enabled Coface to
deliver an annualised RoATE of 14.3% since the beginning of the
year, well above its mid-cycle targets.Finally, Coface will present
its new strategic plan on 5th March 2024.”
Key figures at 30 June 2023
The Board of Directors
of COFACE SA examined the consolidated financial statements at 30
June 2023 at its meeting of 10 August 2023. The Audit Committee, at
its meeting on 9 August 2023, 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 |
H1-22 |
H1-23 |
Variation |
% ex. FX* |
Gross earned premiums |
733.2 |
803.1 |
+9.5% |
+11.2% |
Services
revenue |
140.4 |
156.6 |
+11.5% |
+11.0% |
REVENUE |
873.5 |
959.7 |
+9.9% |
+11.1% |
UNDERWRITING INCOME/LOSS AFTER REINSURANCE |
191.8 |
198.8 |
+3.7% |
+3.9% |
Investment income, net of management expenses |
22.8 |
1.4 |
(93.8)% |
(79.7)% |
Insurance Finance Expenses |
(21.9) |
(14.7) |
(32.9)% |
(18.3)% |
CURRENT OPERATING INCOME |
192.6 |
185.5 |
(3.7)% |
(3.4)% |
Other
operating income / expenses |
(4.3) |
(0.7) |
(83.5)% |
(80.0)% |
OPERATING INCOME |
188.3 |
184.8 |
(1.8)% |
(1.6)% |
NET INCOME |
134.8 |
128.8 |
(4.4)% |
(5.1)% |
|
|
|
|
|
Ratios clés |
H1-22 |
H1-23 |
Variation |
Loss ratio net of reinsurance |
36.6% |
40.3% |
+3.8 |
ppts |
Cost ratio net
of reinsurance |
26.8% |
25.2% |
(1.6) |
ppt |
COMBINED RATIO NET OF REINSURANCE |
63.4% |
65.5% |
+2.2 |
ppts |
|
|
|
|
|
Balance sheet items in €m |
2022 |
H1-23 |
Variation |
Total Equity
(group share) |
2,018.6 |
1,925.3 |
(4.6)% |
|
|
|
H1-22 |
H1-23 |
|
|
Solvency ratio |
192%1 |
192%1 |
- |
ppt |
* Also excludes scope impact1 This 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.
1. Turnover
Coface recorded a consolidated turnover of
€959.7m, up +11.1% compared to H1-22, at constant FX and perimeter.
As reported (at current FX and perimeter), turnover rose +9.9%.
Turnover from the insurance business (including
surety bonds and single risk) increased +11.2% at constant
perimeter and FX. Growth benefited from a sharp increase in client
activity as well as a record retention level of 94.4%, up +0.5%
compared to H1-22. New business totalled €63m, up €5m compared to
H1-22 driven by the mid-market engine, and has now returned to
pre-COVID levels (€65m in H1-19).
The growth in Coface’s client activity had a
positive impact of +2.8% during H1-23. This increase continues to
reflect the scale of the recent economic recovery and inflation,
but the pace of growth is now slowing sharply (-5.2 ppts compared
to H1-22). The price effect remained negative at -2.0% in H1-23 but
improved compared to H1-22 (-3.0%). This decrease is largely
explained by a very low past claims experience and was limited by
the normalisation of the risk environment.
Turnover from non-insurance activities was up
+10.4% compared to H1-22. All the business lines are experiencing
positive trends but at different scales. Turnover from factoring
rose +5.4%, mainly due to the increase in volumes refinanced in
Germany. Information services turnover rose +14.8%, maintaining its
growth trend. Fee and commission income (debt collection
commissions) increased +35.0% due to the increase in claims to be
collected. Commissions were up +11.3%.
Total revenue - in €m(by country of
invoicing) |
H1-22 |
H1-23 |
Variation |
% ex. FX3 |
Northern Europe |
187.5 |
200.1 |
+6.7% |
+7.1% |
Western Europe |
166.8 |
194.3 |
+16.5% |
+16.5% |
Central & Eastern Europe |
89.5 |
91.1 |
+1.8% |
+0.4% |
Mediterranean & Africa |
236.8 |
267.0 |
+12.7% |
+15.2% |
North America |
79.7 |
85.4 |
+7.2% |
+7.1% |
Latin America |
48.2 |
54.5 |
+13.0% |
+23.2% |
Asia
Pacific |
65.0 |
67.3 |
+3.5% |
+4.9% |
Total Group |
873.5 |
959.7 |
+9.9% |
+11.1% |
In Northern Europe, turnover increased +7.1% at
constant FX and +6.7% at current FX. Trade credit insurance
benefited from the increase in client activity and a high retention
rate. Turnover from factoring and services increased +7.6% and
+30.3% respectively.
In Western Europe, turnover was up +16.5% at
constant FX (+16.5% at current FX) due to a high retention rate and
client activity. Q1-23 benefited from a positive one-off on
alignment of accounting methodology.
In Central and Eastern Europe, turnover was up
by +0.4% and +1.8% at current FX, due to the decline in business in
Russia. Excluding Russia, growth would be +5.7%.
In the Mediterranean and Africa region, which is
driven by Italy and Spain, turnover rose +15.2% and +12.7% at
current FX due to a high retention rate and client activity.
Service revenues and commissions increased by +13.5%.
In North America, turnover increased +7.1% at
constant FX and +7.2% as reported, driven by client activities and
a high retention rate.
In Latin America, turnover was up +23.2% at
constant FX and +13.0% at current FX, driven by high retention and
the increase in client activity.
In Asia-Pacific, turnover increased +4.9% at
constant FX and +3.5% at current FX. This growth was driven by high
retention and a recovery in activity in the second quarter.
2. Result
The combined ratio net of reinsurance was 65.5%
in H1-23, up +2.2 ppts year on year. This ratio was up 8.3
ppts compared to H1-22 when excluding the effect of government
schemes.
(i) Loss ratio
The gross loss ratio stood at 39.4%, up 7.4 ppts
compared to the previous 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 related to the underwriting year, although
discounted, remains in line with the historical average. Strict
management of past claims enabled the Group to record
36.3 ppts of recoveries.
The net loss ratio rose to 40.3%, an increase of
3.8 ppts compared to H1-22 (and up 9.6 ppts compared to
H1-22 excluding the impact of government schemes).
(ii) Cost ratio
Coface follows a strict cost management policy.
In the second quarter 2023, Coface maintained its discipline, with
costs growing by +10.2% at constant FX and perimeter, and +7.7% at
current FX. This increase in costs is lower than the growth in
turnover, even though Coface continued to invest. The cost ratio
before reinsurance was 29.8%, an increase of 0.2 ppt year on
year.
The cost ratio net of reinsurance was 25.2% in
H1-23, an improvement of 1.6 ppt year on year.
Net financial income for the first half was
€1.4m. This amount includes market value adjustments for -€15.2m
(particularly on real estate funds), positive hedging results, and
a currency effect of -€17.4m due to the application of IAS 29
(hyperinflation) in Argentina and Turkey and the rise in the euro
against the other currencies in which the group does business.
The portfolio’s current yield (i.e. excluding
capital gains, depreciation and FX impact) was €31.9m. The
accounting yield4, excluding capital gains and the fair value
effect, was 1.1% in H1-23. The yield on new investments was
3.4%.
- Operating income
and net income
Operating income amounted to €184.8m in H1-23,
down -1.8%. It continues to benefit mainly from revenue growth.
The effective tax rate was 24% (unchanged from
H1-22).
In total, net income (group share) stood at
€128.8m, down -4.4% compared to H1-22, of which €67.7m in
Q2-23.
3. Shareholders’
equity
At 30 June 2023, Group shareholders’ equity
stood at €1,925.3m, down €93.3m, or -4.6% (compared
to €2,018.6m at 31 December 2022).
This change is mainly due to positive net income
of €128.8m, the payment of the dividend (-€227.0m) and a rise in
unrealised capital gains (€16.7m).
The annualised return on average tangible equity
(RoATE) was 14.3% at 30 June 2023, mainly due to the improvement in
underwriting income.
The solvency ratio reached 192%5, stable
compared to H1-22. It remains well above the upper end of the
target range (155%-175%).
4. Outlook
In the second quarter of the year, the global
economy benefited from a decline in commodity prices, which
concerned both energy and non-energy. In particular, oil prices
suffered from a weak demand outlook, notably due to the lack of a
real rebound of the Chinese economy. This latter is experiencing a
persistently soft industrial cycle and is suffering from the
relocation of some production facilities to other countries because
of geostrategic uncertainties.
Inflation remains the key concern for central
banks. The recent decline in oil prices brought a welcome relief in
inflationary pressure but it could rapidly revert should demand
recover. Central banks are therefore expected to continue
tightening their monetary policies, which should keep global growth
at a modest level both in 2023 and 2024.
Against this backdrop of slow growth and rising
interest rates, Coface anticipates a further increase in business
defaults. Accordingly, Coface has significantly stepped up its
preventive actions on the risk portfolio in close relationship with
its clients, in line with its strategy.
The credit insurance sector is entering a new
phase of its cycle, which will see weaker and potentially negative
client activity, a rise in business failures, and insurance prices
bottoming out. Against this clearly less favourable backdrop,
Coface continues to manage its risks rigorously, while remaining
faithful to its strategy of close collaboration with its
customers.
As the Build to Lead strategic plan nears its
end, Coface is actively preparing its next plan, which will be
presented to investors on 5th March 2024.
Coface’s operations continue to be backed by a
solid balance sheet. The solvency ratio reached 192%6, above the
target range (155% - 175%).
Conference call for financial
analysts
Coface’s results for H1-2023 will be discussed
with financial analysts during the conference call on
10 August 2023 at 18.00 (Paris time). Dial one of the
following numbers:
- By webcast:
Coface H1-23 results - Webcast
- By telephone
(for the sell-side analyst): Coface H1-23 - 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 |
Q2-23 |
|
% |
% ex. FX* |
Gross earned premiums |
359.2 |
374.0 |
403.5 |
379.0 |
395.3 |
407.8 |
|
+9.0% |
+11.4% |
Other
revenues |
68.8 |
71.6 |
70.1 |
73.0 |
79.8 |
76.8 |
|
+7.3% |
+8.1% |
REVENUE |
428.0 |
445.6 |
473.5 |
452.0 |
475.1 |
484.5 |
|
+8.7% |
+10.9% |
UNDERWRITING INCOME (LOSS) AFTER
REINSURANCE |
82.3 |
109.5 |
84.9 |
72.0 |
95.3 |
103.5 |
|
(5.5)% |
(2.6)% |
Investment income, net of management expenses |
11.3 |
11.5 |
13.5 |
(0.6) |
(2.6) |
4.0 |
|
(65.1)% |
(38.3)% |
Insurance Finance Expenses |
(11.5) |
(10.4) |
(10.5) |
14.9 |
(2.4) |
(12.3) |
|
+18.7% |
+39.2% |
CURRENT OPERATING INCOME |
82.0 |
110.6 |
87.9 |
86.2 |
90.4 |
95.2 |
|
(14.0)% |
(10.2)% |
Other
operating income / expenses |
(1.2) |
(3.2) |
(0.7) |
(4.1) |
(0.3) |
(0.4) |
|
(88.4)% |
(80.5)% |
OPERATING INCOME |
80.8 |
107.4 |
87.3 |
82.1 |
90.0 |
94.8 |
|
(11.8)% |
(8.1)% |
NET INCOME |
52.3 |
82.5 |
51.0 |
54.6 |
61.2 |
67.7 |
|
(18.0)% |
(13.3)% |
Income tax
rate |
31.0% |
19.3% |
32.8% |
25.5% |
25.5% |
21.9% |
|
+2.6 ppts. |
Résultats cumulés
Income
statements items in €mcumulated
figures |
Q1-22 |
H1-22 |
9M-22 |
2022 |
Q1-23 |
H1-23 |
|
% |
%ex. FX* |
|
Gross earned premiums |
359.2 |
733.2 |
1,136.6 |
1,515.7 |
395.3 |
803.1 |
|
+9.5% |
+11.2% |
|
Other
revenues |
68.8 |
140.4 |
210.4 |
283.4 |
79.8 |
156.6 |
|
+11.5% |
+11.0% |
|
REVENUE |
428.0 |
873.5 |
1,347.0 |
1,799.0 |
475.1 |
959.7 |
|
+9.9% |
+11.1% |
|
UNDERWRITING INCOME (LOSS) AFTER
REINSURANCE |
82.3 |
191.8 |
276.7 |
348.6 |
95.3 |
198.8 |
|
+3.7% |
+3.9% |
|
Investment income, net of management expenses |
11.3 |
22.8 |
36.3 |
35.7 |
(2.6) |
1.4 |
|
(93.8)% |
(79.7)% |
|
Insurance Finance Expenses |
(11.5) |
(21.9) |
(32.4) |
(17.6) |
(2.4) |
(14.7) |
|
(32.9)% |
(18.3)% |
|
CURRENT OPERATING INCOME |
82.0 |
192.6 |
280.5 |
366.8 |
90.4 |
185.5 |
|
(3.7)% |
(3.4)% |
|
Other
operating income / expenses |
(1.2) |
(4.3) |
(5.0) |
(9.1) |
(0.3) |
(0.7) |
|
(83.5)% |
(80.0)% |
|
OPERATING INCOME |
80.8 |
188.3 |
275.5 |
357.7 |
90.0 |
184.8 |
|
(1.8)% |
(1.6)% |
|
NET INCOME |
52.3 |
134.8 |
185.8 |
240.4 |
61.2 |
128.8 |
|
(4.4)% |
(5.1)% |
|
Income tax
rate |
31.0% |
24.3% |
26.8% |
26.5% |
25.5% |
23.7% |
|
(0.6)
ppt. |
* 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
2023/2024(subject
to change)9M-2023 results: 14 November 2023 (after
market close)Investor Day: 5 March 2024 (Paris)
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”).
|
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 This 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 impact4 Book yield calculated on the
average of the investment portfolio excluding non-consolidated
subsidiaries.5 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 result of the definitive calculation may differ from the
preliminary calculation. The estimated solvency ratio is not
audited.6 This 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.
- 2023 08 10 PR results H1-2023 - COFACE SA
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