Coface Holding’s turnover grew by 5.9% in the first half of 2008, while the decline in net profit was limited to 10%.
In the first half of 2007, the company’s consolidated turnover was €792mn, and in the first half of 2008 it reached €838mn. This marks an increase of 5.6% at constant structure, and a change of 5.9% at current scope.
Growth has mainly been driven by two factors: activities outside Europe in Coface’s traditional business lines such as credit insurance and credit management services, and its expanding factoring business.
Within Europe, traditional lines rose by just 1.7% in constant data. This relatively low rate is a result of an overestimation of turnover at the end of 2007 which had to be adjusted at the beginning of 2008. The rate was also affected by the reduction of budgets of many companies.
However, traditional lines outside Europe grew by 21.7%. It has also strengthened its position in Latin America, with the acquisition of the majority of SBCE, the Brazilian export credit insurer. It has also expanded in Asia, doubling its Bangalore management centre, launch of receivables management in Australia, Hong Kong and India, as well as a new network of local services for Japanese multinationals in Asia.
Factoring saw a growth of 13.6%, a reflection of the global expansion of this business. To date this year, factoring operations has opened in Czech Republic, Slovakia, China, Australia, Israel, Ireland and Russia.
Loss ratio remained controlled at 55% in the first half of 2008, following five years of low loss rates and a record low of 49% in the years 2005, 2006 and 2007.
Claims have increased in number by 20% compared to the same period in 2007, and by 37% in amount because of a proportionately higher deterioration of solvency for medium and large companies.
Operating profit totalled €138mn, a decrease of 13% compared with the first half of 2007.
Looking towards the rest of 2008, Coface expects that global growth will be around 3%, compared to 4.1%. It predicts that with the exception of Africa and the Middle East, all the world’s regions will lose around one point of GDP of growth.
Although Coface states that the emerging countries are showing increased resilience to a global slowdown compared to previous crises, there are still a number of uncertainties that could lead to a worsening of the credit crisis. These include continuing loss of confidence among US and European households and companies, a delayed end to the banking crisis, and a sharp slowdown in China that might question the strength of emerging economies.
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