COFACE SA: FY-2023 results: net income at €240.5m and proposed
dividend at €1.30 per share
FY-2023 results: net income at €240.5m
and proposed dividend at €1.30 per share
Paris, 27 February 2024 –
17.35
- Turnover: €1,868m, up +6.0%
at constant FX and perimeter and up +3.8% on a reported
basis
- Trade credit insurance premiums
increased by +5.4%; growth in client activities was negative in the
second half of the year as a result of falling inflation and
economic slowdown
- Client retention stood at a record
high (93.1%); price effect was still negative (-1.9%) but
stabilised in Q4-23
- Double digit growth in business
information (+17.3% at constant FX and +23.4% in Q4 23) and debt
collection, which is less cyclical. Factoring up by +2.6%
- Net loss ratio at 37.7%,
down by 2.0 ppts; net combined ratio at 64.3%, down by
3.3 ppts
- Gross loss ratio at 35.8%, up 0.3
ppt in a risk environment now close to historical averages
- Net cost ratio improved by 1.4 ppt
at 26.6% reflecting high reinsurance commissions and business mix
while we continue to invest
- Net combined ratio for Q4-23 at
59.0%, improving by 14.4 ppts on positive development in major
claims
- Net income (group share) of
€240.5m, of which €50.8m in Q4-23. Annualised
RoATE1 at 13.4%
- Earnings per share reached
€1.60
- Coface continues to be
backed by a solid balance sheet:
- Estimated solvency ratio at ~199%2,
above the upper end of target range (155% to 175%)
- Proposal to distribute a dividend3
per share of €1.30 representing an 81% pay-out ratio
- Renewal
of the mandate of CEO, Xavier Durand, for 4 years and presentation
of the next strategic plan “Power the Core” on 5 March
2024
Unless otherwise indicated, change comparisons
refer to the results as at 31 December 2022 (applying IFRS 17
methodology)
Xavier Durand, Coface’s Chief Executive
Officer, commented:“Coface delivered another strong year
in a volatile and relatively weak global economic environment in
2023. Our turnover rose +6.0% at constant FX over the year due to
an excellent first half, client retention which remained at record
highs and an increase of service revenues. Business information
revenue was up +23.4% in the last quarter, with FY growth of
+17.3%, confirming this activity’s growth potential.Annual net
income under IFRS 17 was stable at €240m thanks to an excellent
underwriting margin, leading to an annualised RoATE of 13.4%
despite the negative impact of the fall of certain foreign
currencies (Argentina, Turkey) and a drop in real estate prices,
which affected our net income.In an increasingly uncertain
environment, Coface’s teams confirmed their dedication to and their
high level of expertise at the service of our clients.We will
propose a dividend of €1.30 per share at the Shareholders’ Meeting,
representing a payout ratio of 81%3. This is in line with the
ambitions of the Build to Lead strategic plan – the objectives of
which have all been met or exceeded. We will present our new
strategic plan 2024 - 2027, on 5 March.”
Key figures at 31 December
2023
The Board of Directors
of COFACE SA approved the consolidated financial statements at 31
December 2023 at its meeting of 27 February 2024. The Audit
Committee at its meeting on 26 February 2024 also previously
reviewed them. Accounts are non-audited, certification is in
progress.
Income
statements items in €m |
2022 |
2023 |
Variation |
% ex. FX* |
Insurance revenue |
1,515.7 |
1,559.1 |
+2.9% |
+5.4% |
Services
revenue |
283.4 |
309.2 |
+9.1% |
+9.5% |
REVENUE |
1,799.0 |
1,868.2 |
+3.8% |
+6.0% |
UNDERWRITING INCOME/LOSS AFTER REINSURANCE |
348.6 |
395.4 |
+13.4% |
+14.3% |
Investment income, net of management expenses |
35.7 |
12.4 |
(65.2)% |
(123.2)% |
Insurance Finance Expenses |
(17.6) |
(40.0) |
+127.7% |
+133.7% |
CURRENT OPERATING INCOME |
366.8 |
367.9 |
+0.3% |
(4.8)% |
Other
operating income / expenses |
(9.5) |
(5.0) |
(48.1)% |
(42.1)% |
OPERATING INCOME |
357.2 |
362.9 |
+1.6% |
(3.8)% |
NET INCOME |
240.4 |
240.5 |
+0.0% |
(10.0)% |
|
|
|
|
|
Key
ratios |
2022 |
2023 |
Variation |
Loss ratio net of reinsurance |
39.7% |
37.7% |
(2.0) |
ppts |
Cost ratio net
of reinsurance |
28.0% |
26.6% |
(1.3) |
ppt |
COMBINED RATIO NET OF REINSURANCE |
67.6% |
64.3% |
(3.3) |
ppts |
|
|
|
|
|
Balance sheet items in €m |
2022 |
2023 |
Variation |
Total Equity
(group share) |
2,018.6 |
2,050.8 |
+1.6% |
Solvency ratio |
201%1 |
199%1 |
(2) |
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 result of the definitive calculation may differ from the
preliminary calculation. The estimated solvency ratio is not
audited.
1. Turnover
In 2023, Coface recorded a consolidated turnover
of €1,868.2m, up +6.0% compared to 2022 at constant FX and
perimeter. As reported (at current FX and perimeter), turnover rose
+3.8%.
Revenues from insurance activities (including
surety bonds and single risk) increased by +5.4% at constant FX and
perimeter. Growth benefited from a rise in client activity in the
first half of the year, but this fell into negative territory in
the second half following a decline in inflation and the economic
slowdown. The retention rate reached a record level of 93.1% (up
+0.2% compared to 2022). Buoyed by an increase in demand, new
business rose to €117m, up €7m compared to 2022.
The growth in Coface’s client activities had a
positive impact of +2.3% during 2023. However, this growth reflects
the slowdown of the economy and inflation (-11.5 ppts compared
to 2022). The price effect remained negative, coming in at -1.9%
for FY-23 (compared to -3.0% for FY-22) and stabilised in Q4-23.
This is largely due to very low past losses offset by the current
normalisation environment.
Turnover from non-insurance activities was up
+10.3% compared to 2022. All the business lines are experiencing
positive growth. Turnover from factoring rose +2.6%, mainly due to
the increase in volumes refinanced in Germany (+3.9%). Revenues
from information services continued to grow, rising +17.3% (+23.4
in Q4-23). Fee and commission income (debt collection commissions)
increased +42.1% due to the increase in claims to be collected.
Commissions were up +8.7%.
Total revenue - in €m(by country of
invoicing) |
2022 |
2023 |
Variation |
% ex. FX4 |
Northern Europe |
373.1 |
379.6 |
+1.7% |
+2.0% |
Western Europe |
359.6 |
380.1 |
+5.7% |
+5.9% |
Central & Eastern Europe |
182.0 |
177.1 |
(2.7)% |
(4.5)% |
Mediterranean & Africa |
484.7 |
526.3 |
+8.6% |
+12.4% |
North America |
168.4 |
171.8 |
+2.1% |
+5.6% |
Latin America |
100.8 |
100.3 |
(0.5)% |
+11.1% |
Asia
Pacific |
130.5 |
133.1 |
+2.0% |
+5.2% |
Total Group |
1,799.0 |
1,868.2 |
+3.8% |
+6.0% |
In Northern Europe, turnover increased +2.0% at
constant FX and +1.7% at current FX. The region saw a slump in
client activity, but adjacent activities were on the rise.
Factoring turnover rose by +3.9%.
In Western Europe, turnover increased +5.9% at
constant FX (+5.7% at current FX). Client activities were resilient
and information sales increased.
In Central and Eastern Europe, turnover fell
-4.5% at constant FX (-2.7% at current FX) due to the decline in
business in Russia. Excluding Russia, growth would be +1.3%.
In the Mediterranean and Africa region, which is
driven by Italy and Spain, turnover rose +12.4% at constant FX and
+8.6% at current FX on the back of strong sales performance.
In North America, turnover increased +5.6% at
constant FX and +2.1% as reported, driven by the return in client
activity and rising commissions.
In Latin America, turnover increased +11.1% at
constant FX and fell -0.5% at current FX. The region saw a slump in
client activity, mainly in commodities and metals, and the
consequences of the devaluation of the Argentine peso.
In Asia-Pacific, turnover increased +5.2% at
constant FX and +2.0% at current FX. The boost in revenue was
driven by past sales performances, which sustained the growth of
the portfolio, and high retention rates.
2. Result
The combined ratio net of reinsurance was 64.3%
for the year, improved by 3.3 ppts year on year. The combined ratio
net of reinsurance for Q4-23 stood at 59.0%, improved by 14.4 ppts
year on year, and 7.8 ppts compared to Q3-23.
(i) Loss ratio
The gross loss ratio stood at 35.8%, up 0.3 ppt
compared to the previous year. This reflects an increased claims
frequency since H1-21, with the number of claims nearing pre COVID
levels. The amount of claims recorded is now higher than in 2019.
Lastly, large losses have become relatively significant in size
again while remaining below the historical average.
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 47.1 ppts of recoveries.
The net loss ratio improved to 37.7%, down 2.0
ppts compared to 2022.
(ii) Cost ratio
Coface follows a strict cost management policy.
Coface remained disciplined throughout 2023, with costs rising 7.0%
at constant FX and perimeter (+4.0% in Q4-23). This increase was
slightly more than growth in revenue over the year (6.0%) due to
ongoing investment. The cost ratio before reinsurance stood at
31.5%, down 0.2 ppt despite slowed revenue growth due to an
improvement in the product mix.
In 2023, the cost ratio net of reinsurance was
26.6%, an improvement of 1.4 ppt year on year due to the
improved gross ratio and reinsurance commissions that remain
high.
Net financial income came to +€12.4m in 2023.
This amount includes market value adjustments for -€21.9m
(including -€28.9m on real estate funds), positive hedging results
and a currency effect for -€38.7m. This FX effect was due to the
major devaluation in Argentina and the application of IAS 29
(Hyperinflation) in Turkey.
The portfolio’s current yield (i.e. excluding
capital gains, depreciation and FX) was €64.9m. The accounting
yield5, excluding capital gains and fair value effect, was 2.1% for
2023. The yield on new investments was 3.9%.
In 2023, Insurance Finance Expenses (IFE) stood
at €40.0m due to higher discount rates and higher loss reserves on
the balance sheet.
- Operating income
and net income
Operating income amounted to €362.9m in 2023, up
1.6%.
The effective tax rate was 27% (27% in
2022).
In total, net income (group share) stood at
€240.5m, stable compared to 2022 under IFRS 17, of which €50.8m in
Q4-23.
3. Shareholders’
equity
At 31 December 2023, Group shareholders’ equity
stood at €2,050.8m, up €32.2m or +1.6% (€2,018.6m at
31 December 2022).
This change was mainly due to the positive net
income of €240.5m, the payment of the dividend (-€227.0m) and the
increase in unrealised capital gains (€25.0m).
The annualised return on average tangible equity
(RoATE) was 13.4% at 31 December 2023, mainly due to the
improvement in underwriting income.
The solvency ratio reached 199%6, representing
an decrease of 2 ppts compared to FY-22. It remains well above the
upper end of the target range (155%-175%). The solvency ratio
excludes the debt that will be repaid in March 2024.
Coface will propose €1.30 dividend per share,
corresponding toa payout ratio of 81%7 to shareholders at the
Annual Shareholders’ Meeting, in line with its capital management
policy.
4. Outlook
The most pessimistic scenarios for 2023 did not
materialise. While the Chinese economy continued to disappoint, the
United States continued to surprise on the upside. The economic
impact of higher interest rates was delayed in an environment of
full employment and still strong corporate balance sheets.
The most notable point of the year was the
generalised decline in inflation through the second half of the
year due to proactive coordinated actions of central banks and the
fall of energy prices despite an increasingly tense geopolitical
environment.
For 2024, Coface anticipates a drawn-out soft
landing for the global economy, with growth expected at +2.2% after
+2.6% in 2023. Downside risks are real, in particular due to the
unprecedented number of political elections in the world,
culminating with the US presidential election at the end of the
year.
As expected, business failures continued to
rise, sometimes above pre-pandemic levels. However, the many
preventive measures taken by Coface so far avoided a spike in
recorded claims. While the number of claims has not yet reached
2019 levels, the total claims amount is now equivalent.
In 2023, Coface’s IFRS 17 results were stable
against the previous year, once again demonstrating Coface’s
resilience in a challenging environment. This year marks the end of
the Build to Lead strategic plan, with all its objectives having
been met or exceeded. Coface will present its new strategic plan
2024 - 2027, which will build on the success of the Build to Lead
plan, on 5 March 2024.
Conference call for financial
analysts
Coface’s results for FY-2023 will be discussed
with financial analysts during the conference call on
28 February 2024 at 11.00 (Paris time). Dial one of the
following numbers:
- By
webcast : Coface FY-2023 results - Webcast
- By telephone
(for the sell-side analysts): Coface FY-2023 - 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 |
Q3-23 |
Q4-23 |
|
% |
% ex. FX* |
Insurance revenue |
359.2 |
374.0 |
403.5 |
379.0 |
395.3 |
407.8 |
384.7 |
371.3 |
|
(2.1)% |
+1.6% |
Other
revenues |
68.8 |
71.6 |
70.1 |
73.0 |
79.8 |
76.8 |
73.4 |
79.2 |
|
+8.6% |
+7.8% |
REVENUE |
428.0 |
445.6 |
473.5 |
452.0 |
475.1 |
484.5 |
458.1 |
450.4 |
|
(0.3)% |
+2.7% |
UNDERWRITING INCOME (LOSS) AFTER
REINSURANCE |
82.3 |
109.5 |
84.9 |
72.0 |
95.3 |
103.5 |
91.2 |
105.4 |
|
+46.4% |
+44.9% |
Investment income, net of management expenses |
11.3 |
11.5 |
13.5 |
(0.6) |
(2.6) |
4.0 |
13.0 |
(2.0) |
|
+223.5% |
NS |
Insurance Finance Expenses |
(11.5) |
(10.4) |
(10.5) |
14.9 |
(2.4) |
(12.3) |
(15.4) |
(9.9) |
|
(166.3)% |
(105.3)% |
CURRENT OPERATING INCOME |
82.0 |
110.6 |
87.9 |
86.2 |
90.4 |
95.2 |
88.9 |
93.5 |
|
+8.4% |
(16.9)% |
Other
operating income / expenses |
(1.2) |
(3.2) |
(0.7) |
(4.5) |
(0.3) |
(0.4) |
(0.2) |
(4.0) |
|
(11.9)% |
(0.6)% |
OPERATING INCOME |
80.8 |
107.4 |
87.3 |
82.1 |
90.0 |
94.8 |
88.6 |
89.5 |
|
+9.5% |
(17.8)% |
NET INCOME |
52.3 |
82.5 |
51.0 |
54.6 |
61.2 |
67.7 |
60.9 |
50.8 |
|
(7.0)% |
(54.1)% |
Income tax
rate |
31.0% |
19.3% |
32.8% |
25.5% |
25.5% |
21.9% |
24.2% |
36.0% |
|
+10.5 ppts. |
Cumulated results
Income
statements items in €mcumulated
figures |
Q1-22 |
H1-22 |
9M-22 |
2022 |
Q1-23 |
H1-23 |
9M-23 |
2023 |
|
% |
%ex. FX* |
Insurance revenue |
359.2 |
733.2 |
1 136.6 |
1 515.7 |
395.3 |
803.1 |
1 187.8 |
1 559.1 |
|
+2.9% |
+5.4% |
Other
revenues |
68.8 |
140.4 |
210.4 |
283.4 |
79.8 |
156.6 |
230.0 |
309.2 |
|
+9.1% |
+9.5% |
REVENUE |
428.0 |
873.5 |
1,347.0 |
1,799.0 |
475.1 |
959.7 |
1,417.8 |
1,868.2 |
|
+3.8% |
+6.0% |
UNDERWRITING INCOME (LOSS) AFTER
REINSURANCE |
82.3 |
191.8 |
276.7 |
348.6 |
95.3 |
198.8 |
290.0 |
395.4 |
|
+13.4% |
+14.3% |
Investment income, net of management expenses |
11.3 |
22.8 |
36.3 |
35.7 |
(2.6) |
1.4 |
14.5 |
12.4 |
|
(65.2)% |
(123.2)% |
Insurance Finance Expenses |
(11.5) |
(21.9) |
(32.4) |
(17.6) |
(2.4) |
(14.7) |
(30.1) |
(40.0) |
|
+127.7% |
+133.7% |
CURRENT OPERATING INCOME |
82.0 |
192.6 |
280.5 |
366.8(1) |
90.4 |
185.5 |
274.4 |
367.9 |
|
+0.3% |
(4.8)% |
Other operating
income / expenses |
(1.2) |
(4.3) |
(5.0) |
(9.5) |
(0.3) |
(0.7) |
(0.9) |
(5.0) |
|
(48.1)% |
(42.1)% |
OPERATING INCOME |
80.8 |
188.3 |
275.5 |
357.7 |
90.0 |
184.8 |
273.4 |
362.9 |
|
+1.6% |
(3.8)% |
NET INCOME |
52.3 |
134.8 |
185.8 |
240.4 |
61.2 |
128.8 |
189.7 |
240.5 |
|
+0.0% |
(10.0)% |
Income tax
rate |
31.0% |
24.3% |
26.8% |
26.5% |
25.5% |
23.7% |
23.8% |
26.8% |
|
+0.3 ppt. |
* Also excludes scope impact(1) Expenses for €0.8m have been
reclassified as commissions for 2022.
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)Capital
market day: 5 March 2024 (Paris)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”).
|
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 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.
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 The distribution proposal will be submitted to the Annual
General Shareholders’ Meeting to be held on 16 May 2024.4 Also
excludes scope impact5 Book yield calculated on the average of the
investment portfolio excluding non-consolidated subsidiaries.6This
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.7 The distribution proposal will be submitted to the
Annual General Shareholders’ Meeting to be held on 16 May 2024.
- 2024 02 27 PR results FY-2023 - COFACE SA
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