As Coface launches the 2020 edition of its Country & Sector Risks Handbook, Chief Economist Julien Marcilly today presents the main threats for the global economy in 2020 at the Coface Country Risk Conference in Paris. The US-China trade agreement will not be enough to rekindle international trade.
We have completed our Fit to Win plan with record results, despite a riskier economic environment. Our net income is up by 20%, to €147m. The tangible return on equity comes in at 9.1%, excluding non-recurring items. Record retention and a pick-up in new business boosted growth to 5.9%. Finally, in terms of capital, the French regulator authorised our usage of our internal model to calculate the solvency requirement. Our solvency ratio stands at 190%, up 21 points, which allows us to propose a payment of a dividend of €1.0 per share to the Shareholders Annual General Assembly.
The global auto sector is facing several challenges including enhanced and stricter regulations against environmental risks in the context of a slowdown of the global economy. Car sales are on a downward trend, as uncertainty bites.
While the number of companies facing corporate insolvency has decreased since the beginning of the year, their cost has increased, both financially and in terms of the number of jobs affected. After a difficult first quarter, marked by the repercussions of the “yellow vests” movement, the number of corporate insolvencies since the beginning of the year in France is set to decline for the fourth consecutive year. However, Coface expects a slight rebound in insolvencies in 2020 (+0.9%), mainly due to the expected slowdown in the construction sector, which was largely driven by public works in 2019 in the run-up to the municipal elections.
85% of companies report payment delays in 2019. This is an increase from 2017 by 7 percentage points. According to Coface's 2019 Germany payment survey of 442 companies in, the country is in a phase of change. The pressure on companies from international competition is increasing.