Coface records a very good start to the year with a net income of
€68.4m, up 11.9%
Coface records a very good start to the
year with a net income of €68.4m, up 11.9%
Paris, 6 May 2024 – 17.35
- Turnover: €464m, down -1.6%
at constant FX and perimeter
- Trade credit insurance premiums
decreased by -3.3%; growth in client activities was nil at the
start of the year, after a negative H2-23
- Client retention still high (93.8%)
but down from records; pricing effect remained negative
(-1.3%)
- Double-digit growth in business
information (+21.6% at constant FX) and debt collection (+24.1%);
factoring down by -6.3%
- Net loss ratio at 35.8%,
improved by 4.9 ppts; net combined ratio at 63.1%, improved by
3.2 ppts
- Gross loss ratio at 33.2%, improved
by 7.5 ppts with stable opening year reserving and high reserve
releases
- Net cost ratio up by 1.6 ppt to
27.3%, reflecting lower revenues and continued investments
partially offset by better product mix
- Net income (group share) at
€68.4m, up +11.9% compared to Q1-23
-
Annualised RoATE1 at
14.8%
Unless otherwise indicated, change comparisons
refer to the results as at 31 March 2023
Xavier Durand, Coface’s Chief Executive
Officer, commented:“Our results for the first quarter
demonstrate the good execution of our strategy and reflect the
current economic cycle. Our credit insurance revenues were affected
by the decline in inflation and sluggish client activity, and they
were down 3.3%, against a high comparison basis. Negative repricing
has eased (-1.3%) in a still competitive market while our new
business picked up, on the back of our past investments, in
particular in the mid-market segment. Service revenues, which are
less cyclical, continued their double-digit rise. Consistently with
the strategy developed in our Power the Core plan, we continued to
invest in our risk infrastructure, to better serve our
clients.Last, our net income increased by +11.9% year on year, to
€68.4m, as the combined ratio remained under control at 63.1%.
RoATE stood at 14.8%, above our mid-cycle objectives.”
Key figures at 31 March
2024
The Board of Directors
of COFACE SA examined the summary consolidated financial statements
for the first three months (non-audited) during its meeting on 6
May 2024. The Audit Committee had previously reviewed them at its
meeting on 3 May 2024.
Income
statements items in €m |
Q1-23 |
Q1-24 |
Variation |
% ex. FX* |
Insurance revenue |
395.3 |
378.6 |
(4.2)% |
(3.3)% |
Services
revenue |
79.8 |
85.0 |
+6.6% |
+6.9% |
REVENUE |
475.1 |
463.7 |
(2.4)% |
(1.6)% |
UNDERWRITING INCOME/LOSS AFTER REINSURANCE |
95.3 |
100.3 |
+5.2% |
+6.5% |
Investment income, net of management expenses |
(2.6) |
17.9 |
(786.7)% |
(654.3)% |
Insurance Finance Expenses |
(2.4) |
(11.4) |
+382.6% |
+423.3% |
CURRENT OPERATING INCOME |
90.4 |
106.8 |
+18.2% |
+14.7% |
Other
operating income / expenses |
(0.3) |
(0.1) |
(79.1)% |
(75.5)% |
OPERATING INCOME |
90.0 |
106.8 |
+18.6% |
+15.0% |
NET INCOME |
61.2 |
68.4 |
+11.9% |
+5.3% |
|
|
|
|
|
Key
ratios |
Q1-23 |
Q1-24 |
Variation |
Loss ratio net of reinsurance |
40.6% |
35.8% |
(4.9) |
ppts |
Cost ratio net
of reinsurance |
25.7% |
27.3% |
+1.6 |
ppt |
COMBINED RATIO NET OF REINSURANCE |
66.3% |
63.1% |
(3.2) |
ppts |
|
|
|
|
|
Balance sheet items in €m |
2023 |
Q1-24 |
Variation |
Total Equity
(group share) |
2,050.8 |
2,118.5 |
+3.3% |
* Also excludes scope impact
1. Turnover
Coface recorded a consolidated turnover of
€463.7m, down -1.6%% at constant perimeter and FX compared to
Q1-23. As reported (at current FX and perimeter), turnover was down
-2.4%.
Revenues from insurance activities (including
bonding and Single Risk) was down by -3.3% at constant FX and
perimeter due to a decline in inflation and the economic slowdown.
Client retention remains high at 93.8% (down -1.9% on Q1-23), 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 €37m, up €5m compared
to Q1-23.
Growth in client activities was zero over the
first three months of the year after two negative quarters in 2023.
The price effect remained negative at -1.3% in Q1-24 but improved
slightly compared to Q1-23 (-1.5%). This is largely due to very low
past losses offset by the current normalisation environment.
Turnover from non-insurance activities was up
+6.5% compared to Q1-23. However, not all business lines enjoyed
the same momentum. Turnover from factoring was down -6.3%, mainly
due to the fall in volumes refinanced in Germany (-7.7%).
Information services turnover continued to grow, by +21.6% (vs.
+15.0% in Q1-23). Fee and commission income (debt collection
commissions) increased +24.1% due to the increase in claims to be
collected. Commissions were up +7.3%.
Total revenue - in €m(by country of
invoicing) |
Q1-23 |
Q1-24 |
Variation |
% ex. FX2 |
Northern Europe |
102.2 |
97.8 |
(4.2)% |
(4.2)% |
Western Europe |
96.6 |
91.7 |
(5.1)% |
(5.8)% |
Central & Eastern Europe |
45.0 |
45.1 |
+0.2% |
(3.5)% |
Mediterranean & Africa |
133.2 |
138.9 |
+4.3% |
+7.3% |
North America |
41.9 |
42.6 |
+1.6% |
(6.7)% |
Latin America |
26.4 |
18.6 |
(29.5)% |
(11.0)% |
Asia
Pacific |
29.8 |
28.9 |
(3.1)% |
(0.4)% |
Total Group |
475.1 |
463.7 |
(2.4)% |
(1.6)% |
In Northern Europe, turnover was down by -4.2%
at constant FX and -4.2% at current FX. The region was hit by a
slowdown in client activities and the selective renewal of some
loss-making policies. This decline was partially offset by the
growth in adjacent activities. Factoring turnover declined by
-7.7%.
In Western Europe, turnover was down by -5.8% at
constant FX (-5.1% at current FX). The slowdown in client
activities was partially offset by information sales. Q1-23
benefited from a positive accounting effect, the renewal of which
impacted turnover by 1.5 ppt.
In Central and Eastern Europe, turnover fell
-3.5% at constant FX (+0.2% at current FX) due to the decline in
client activities, which weighed on credit insurance.
In the Mediterranean and Africa region, which is
driven by Italy and Spain, turnover rose +7.3% at constant FX and
+4.3% 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 -6.7% at
constant FX but increased by +1.6% as reported due to the
integration of Mexico. The region saw a slump in client activity
despite higher retention.
In Latin America, turnover fell by -11.0% at
constant FX and -29.5% at current FX. The region was hit by a fall
in client activity, mainly in commodities and metals, and the
transfer of Mexico to the North America region.
In Asia-Pacific, turnover decreased by -0.4% at
constant FX and -3.1% at current FX, due to a slowdown in client
activities.
2. Result
The combined ratio net of reinsurance stood at
63.1% for Q1-24 (an improvement of 3.2 ppts year on year and
4.1 ppts compared to the previous quarter).
(i) Loss ratio
The gross loss ratio stood at 33.2%, down 7.5
ppts compared to the previous year. This improvement reflects the
gradual normalisation of the loss experience, offset by high
reserve releases. The number of mid-sized claims was 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 43.7 ppts of recoveries.
The net loss ratio improved by 4.9 ppts compared
to Q1-23, at 35.8%.
(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 Q1-24, costs rose by +6.2% at constant
perimeter and FX, and +5.6% at current FX.
The cost ratio net of reinsurance was 27.3% in
Q1-24, up 1.6 ppt year on year. This rise was mainly due to
the decline in revenues (1.3 ppt), cost inflation
(1.3 ppt) and ongoing investments (1.1 ppt). In contrast,
the improved product mix (information services, debt collection and
fee and commission income) had a positive effect of 1.4 ppt.
High reinsurance commissions explain the remaining of the
variation.
Net financial income was +€17.9m over the first
quarter. This amount includes realised capital gains, which more
than offset negative market value adjustments on real estate
investments (-€6.5m) and an FX effect of -€2.7m, mostly due to the
application of IAS 29 (Hyperinflation) in Turkey and Argentina
(service company).
The portfolio’s current yield (i.e. excluding
capital gains, depreciation and FX) was €19.9m. The accounting
yield3, excluding capital gains and fair value effect, was 0.6% in
Q1-24. The yield on new investments was 3.9%.
Insurance Finance Expenses (IFE) stood at €11.4m
for the first quarter due to higher discount rates and higher loss
reserves.
- Operating income
and net income
Operating income amounted to €106.8m, up
18.6%.
The effective tax rate was 27%, compared to 25%
for Q1-23.
In total, net income (group share) stood at
€68.4m, up 11.9% compared to Q1-23.
3. Shareholders’
equity
At 31 March 2024, Group shareholders’ equity
stood at €2,118.5m, up €67.7m, i.e. +3.3% (compared to €2,050.8m at
31 December 2023.
This change is mainly due to positive net income
of €68.4m.
The annualised return on average tangible equity
(RoATE) was 14.8% in Q1-24, mainly due to the improvement in
underwriting income.
4. Outlook
There were no major changes in the Global
economic growth outlook in the first quarter of the year. Coface
continues to expect full year growth to be down slightly from last
year, with continued outperformance from the United States compared
with Europe.
On the inflation front, the slowdown in price
increases led the market to anticipate several interest rate cuts.
However, the start of the year saw an about-turn in market
expectations. The market is now expecting more moderate rate cuts
in the United States, where growth and the labour market remain
robust. Europe should act sooner to reduce rates. As a result, the
environment is likely to remain risky as diverging monetary
policies generally cause financial tension and higher risks. High
interest rates for a prolonged period typically put greater
pressure on highly indebted companies.
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.
In this environment of continued uncertainty and
modest growth outlook, Coface continues to implement its Power the
Core strategic plan. The first quarter of 2024 marked an excellent
start to this plan, with most key performance indicators
positive.
Conference call for financial
analysts
Coface’s results for 3M-2024 will be discussed
with financial analysts during the conference call on
Monday 6 May at 18.00 (Paris time). Dial one of the
following numbers:
- By webcast:
Coface Q1-24 results - Webcast
- By telephone
(for the sell-side analyst): Coface Q1-24 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 |
Q1-23 |
Q2-23 |
Q3-23 |
Q4-23 |
Q1-24 |
|
% |
% ex. FX* |
Insurance revenue |
395.3 |
407.8 |
384.7 |
371.3 |
378.6 |
|
(4.2)% |
(3.3)% |
Other
revenues |
79.8 |
76.8 |
73.4 |
79.2 |
85.0 |
|
+6.6% |
+6.9% |
REVENUE |
475.1 |
484.5 |
458.1 |
450.4 |
463.7 |
|
(2.4)% |
(1.6)% |
UNDERWRITING INCOME (LOSS) AFTER
REINSURANCE |
95.3 |
103.5 |
91.2 |
105.4 |
100.3 |
|
+5.2% |
+6.5% |
Investment income, net of management expenses |
(2.6) |
4.0 |
13.0 |
(2.0) |
17.9 |
|
(786.7)% |
(654.3)% |
Insurance Finance Expenses |
(2.4) |
(12.3) |
(15.4) |
(9.9) |
(11.4) |
|
+382.6% |
+423.3% |
CURRENT OPERATING INCOME |
90.4 |
95.2 |
88.9 |
93.5 |
106.8 |
|
+18.2% |
+14.7% |
Other
operating income / expenses |
(0.3) |
(0.4) |
(0.2) |
(4.0) |
(0.1) |
|
(79.1)% |
(75.5)% |
OPERATING INCOME |
90.0 |
94.8 |
88.6 |
89.5 |
106.8 |
|
+18.6% |
+15.0% |
NET INCOME |
61.2 |
67.7 |
60.9 |
50.8 |
68.4 |
|
+11.9% |
+5.3% |
Income tax
rate |
25.5% |
21.9% |
24.2% |
36.0% |
27.2% |
|
+1.8
ppt. |
Cumulated results
Income
statements items in €mcumulated
figures |
Q1-23 |
H1-23 |
9M-23 |
2023 |
Q1-24 |
|
% |
%ex. FX* |
Insurance revenue |
395.3 |
803.1 |
1,187.8 |
1,559.1 |
378.6 |
|
(4.2)% |
(3.3)% |
Other
revenues |
79.8 |
156.6 |
230.0 |
309.2 |
85.0 |
|
+6.6% |
+6.9% |
REVENUE |
475.1 |
959.7 |
1,417.8 |
1,868.2 |
463.7 |
|
(2.4)% |
(1.6)% |
UNDERWRITING INCOME (LOSS) AFTER
REINSURANCE |
95.3 |
198.8 |
290.0 |
395.4 |
100.3 |
|
+5.2% |
+6.5% |
Investment income, net of management expenses |
(2.6) |
1.4 |
14.5 |
12.4 |
17.9 |
|
(786.7)% |
(654.3)% |
Insurance Finance Expenses |
(2.4) |
(14.7) |
(30.1) |
(40.0) |
(11.4) |
|
+382.6% |
+423.3% |
CURRENT OPERATING INCOME |
90.4 |
185.5 |
274.4 |
367.9 |
106.8 |
|
+18.2% |
+14.7% |
Other
operating income / expenses |
(0.3) |
(0.7) |
(0.9) |
(5.0) |
(0.1) |
|
(79.1)% |
(75.5)% |
OPERATING INCOME |
90.0 |
184.8 |
273.4 |
362.9 |
106.8 |
|
+18.6% |
+15.0% |
NET INCOME |
61.2 |
128.8 |
189.7 |
240.5 |
68.4 |
|
+11.9% |
+5.3% |
Income tax
rate |
25.5% |
23.7% |
23.8% |
26.8% |
27.2% |
|
+1.8 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.comAdrien BILLET: +33 1
49 02 23 6394 – adrien.billet@coface.com
FINANCIAL CALENDAR
2024(subject to change)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 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 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 ~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 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 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 equity2 Also excludes scope impact3
Book yield calculated on the average of the investment portfolio
excluding non-consolidated subsidiaries.
- 2024 05 06 PR results 3M-2024 COFACE
Coface (TG:65C)
Historical Stock Chart
From Jun 2024 to Jul 2024
Coface (TG:65C)
Historical Stock Chart
From Jul 2023 to Jul 2024