Coface reports first-half net income of 128.8 million Euro

Coface recorded a consolidated turnover of 959.7 million Euro, up +11.1 percent compared to H1-22, at constant FX and perimeter. As reported (at current FX and perimeter), turnover rose +9.9 percent.

Turnover from the insurance business (including surety bonds and single risk) increased +11.2 percent at constant perimeter and FX. Growth benefited from a sharp increase in client activity as well as a record retention level of 94.4 percent, up +0.5 percent compared to H1-22. New business totalled 63 million Euro, up 5 million Euro compared to H1-22 driven by the mid-market engine, and has now returned to pre-COVID levels (65 million Euro in H1-19).

The growth in Coface’s client activity had a positive impact of +2.8 percent 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 percent in H1-23 but improved compared to H1-22 (-3.0 percent). 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 percent compared to H1-22. All the business lines are experiencing positive trends but at different scales. Turnover from factoring rose +5.4 percent, mainly due to the increase in volumes refinanced in Germany. Information services turnover rose +14.8 percent, maintaining its growth trend. Fee and commission income (debt collection commissions) increased +35.0 percent due to the increase in claims to be collected. Commissions were up +11.3 percent.

Net financial income for the first half was 1.4 million Euro. This amount includes market value adjustments for -15.2 million Euro (particularly on real estate funds), positive hedging results, and a currency effect of -17.4 million Euro 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 31.9 million Euro. The accounting yield, excluding capital gains and the fair value effect, was 1.1 percent in H1-23. The yield on new investments was 3.4 percent.

Operating income amounted to 184.8 million Euro in H1-23, down -1.8 percent. It continues to benefit mainly from revenue growth.

The effective tax rate was 24 percent (unchanged from H1-22).

In total, net income (group share) stood at 128.8 million Euro, down -4.4 percent compared to H1-22, of which 67.7 million Euro in Q2-23.

Xavier Durand, Coface’s Chief Executive Officer, commented:

“In the first half of the year, Coface’s turnover grew by 11.1 percent, 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 68 million Euro, 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 percent 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 percent during the first semester). All these elements have enabled Coface to deliver an annualised RoATE of 14.3 percent since the beginning of the year, well above its mid-cycle targets.

Finally, Coface will present its new strategic plan on 5th March 2024.”