Coface Q1-2016 results: A tough quarter in a polarized environment
• Turnover: €365m, -6.3% (-3.8% on a comparable basis ) against a strong Q1-2015, stable vs. Q4-15
• Contrasted regional sales performance
- Lasting soft conditions in mature markets, particularly Europe
- Actions taken on portfolio in emerging markets impact growth
• New business production flat, client retention rate at record level of 92.5%
• Net combined ratio of 87.0% (84.3% excl. one-offs ) stable vs. Q4-15
- Net loss ratio at 55.0% mainly impacted by losses in Asia Pacific region, Commodities Trading sector, and two claims in North America
- Net cost ratio of 29.3% (excl. 2.7 ppts one-offs1) driven by disciplined cost execution
• Net income of €22m (group share), €27m ex. one-offs2
• Agreement on transfer of public guarantees activities signed with Bpifrance on April 18th, effective transfer to take place before end 2016
• Operational efficiency review progressing well, outcome to be integrated into strategic plan, the main themes of which will be communicated at the time of H1-2016 results and presented in full at an Investor Day in London, September 22nd, 2016
Xavier Durand, CEO of Coface, commented: “This has been a tough first quarter. Business turnover and profits were lower compared to the same period last year, against the backdrop of a polarized and volatile economic environment.
Our performance reflects a stark contrast between mature credit insurance markets - where risk is low and competitive pressures are driving down revenue - and emerging markets where risk is high, particularly in the commodities sector. Though the positive impacts of measures taken to reduce our risk exposure in Latin America over the last year are already materializing, it is too early to see the full effects of risk initiatives launched in Asia at the end of last year; these will translate progressively into our results. Given the volatile global economic environment, we remain cautious for 2016.
We are conducting a comprehensive strategic review of the business, which includes the work currently on-going on operational efficiency to improve our competitiveness. Its conclusions will be integrated into the new strategic plan, the main themes of which will be communicated at the time of our half-year results and presented in full on September 22nd.”