Coface Sa · EURONEXT:COFA
Coface Sa — Investor Presentation (March 2020)
16 slides from Coface Sa's investor presentation, Mar 24, 2020
Slide 1: COVID-19, A Triple Shock for the World Economy
COVID-19, A TRIPLE SHOCK FOR THE WORLD ECONOMY Webinar Key Clients, Brokers and Partners 24 March 2020 Julien Marcilly Chief Economist
Slide 2: Contents
CONTENTS • Evolution of the pandemic • Global economic scenario and updated business insolvency outlook • Shock #1: disrupted supply chains • Shock #2: depressed demand • Shock #3: lower oil prices • Central banks and governments are acting fast and strongly • Covid-19: long-term consequences for bu
Slide 3: COVID-19: From a Chinese Epidemic to a Global Pandemic
COVID-19:FROM A CHINESE EPIDEMIC TO A GLOBAL PANDEMIC Daily new confirmed cases of coronavirus Total confirmed coronavirus cases worldwide As of March 18, 2020 (log scale, source: John Hopkins) 1000000 20 000 Rest of the world China World Germany Italy Spain Iran Korea France US Hubei 18 000 100000
Slide 4: How Long Will the Lockdown Last? Learning from Modelling of Pandemic Propagation
HOW LONG WILL THE LOCKDOWN LAST? LEARNING FROM MODELLING OF PANDEMIC PROPAGATION France: Scenerios of propagation of the outbreak (Y axis: population, X axis: days) R0 = Propagation rate = number of daily contacts X probability of contagion X length of desease 70 000 000 500 000 R0 = 3 R0 = 1,5 450
Slide 5: How Long Will the Lockdown Last? Learning from Asia
HOW LONG WILL THE LOCKDOWN LAST? LEARNING FROM ASIA COVID-19’s tests per million people China: Share of businesses that resumed work (national sources) 4500 Provinces March 3 March 17 %GDP 4000 Sichuan 61% 73% 4% 3500 Shandong 61% 73% 8% Fujian 62% 72% 4% 3000 Guangdong 60% 72% 10% 2500 Jiangsu 59%
Slide 6: The Pandemic Evolution Drives Economic Prospects
THE PANDEMIC EVOLUTION DRIVES ECONOMIC PROSPECTS Q1 2020 Q2 2020 Q3 2020 Q4 2020 Lockdown ends Peak in China The gradual reopening process goes on, in May in the US, Baseline Lockdowns start then very gradual no second wave of pandemic but both scenario in Europe and the businesses and consumers rem
Slide 7: The Sharpest Downturn Since the Global Credit Crisis
THE SHARPEST DOWNTURN SINCE THE GLOBAL CREDIT CRISIS Coface’s GDP Growth Forecast Assumptions of production cut by (annual average, %) sector during lockdowns China 4,5 0% India 5,0 -10% Russia 0,5 -20% Brazil -0,6 -20% -20% -30% -25% United States -0,3 -40% Japan -0,3 -40% -50% United Kingdom -1,9
Slide 8: The Sharpest Downturn Since the Global Credit Crisis (2)
THE SHARPEST DOWNTURN SINCE THE GLOBAL CREDIT CRISIS (2) Coface’s world GDP estimates and forecasts Global export volumes Annual average, % YoY % change 5 20% 4.3 4 15% 2003-2010: 3.2 3.3 3.2 5.1% 3.0 3.0 10% 3 2.5 2.7 2011-2018: 2019: 2.5 5% 2.9% -0.4% 2 2.3 0% 1 -5% 2020 (f): 0.9 -1.8% 0 -10% -1 -
Slide 9: Toward a Broadbased and Double-Digit Increase in Business Insolvencies in 2020
TOWARD A BROADBASED AND DOUBLE-DIGIT INCREASE IN BUSINESS INSOLVENCIES IN 2020 Coface’s World Business Insolvency Forecasts (year on year % change) 35% 33% 30% 2020 (January 2020 Forecast) 2020 (f) 25% 19% 20% 17% 14% 15% 12%12%12% 13% 12% 11% 10% 11% 9% 10% 10% 8% 8% 9% 9% 6% 6% 7% 4% 5% 5% 3% 3% 4
Slide 10: The First Signs of Recession Are Already Visible
THE FIRST SIGNS OF RECESSION ARE ALREADY VISIBLE Germany: ZEW business survey US: New York Fed and Philadelphia Fed Manufacturing Survey Lowest point 08/09 Mar. 20 Jan. 20 IT NY Empire State Manufacturing Index 50 Telecom. Philadelphia Fed Manufacturing Index 40 Services 30 Trade 20 Utilities 10 Con
Slide 11: Shock #1: Disrupted Supply Chains
SHOCK #1: DISRUPTED SUPPLY CHAINS Inventories to sales ratio US: ISM COVID-19 Survey (in months, listed companies, sources: Datastream, Coface) % of respondents answering "Yes“ (March 2020) Average Electronic Is your company experiencing 72% supply chain disruptions Pharma. Transport Receiving order
Slide 12: Shock #2: Depressed Demand
SHOCK #2: DEPRESSED DEMAND China: Main activity trackers US: University of Michigan Survey of Consumers Month on month % change, last data: March 2020 10 5 0 -5 Coronavirus Government outbreak -10 Consumer sentiment index shutdown Tariffs Consumer expectations increase Current economic conditions -1
Slide 13: Central Banks and Governments Are Acting Fast and Strongly
CENTRAL BANKS AND GOVERNMENTS ARE ACTING FAST AND STRONGLY Eurozone: Key government measures Germany France Italy Spain Easier short-term working yes yes yes yes admissions Tax liquidity help yes yes yes yes unlimited credits by state owned KfW not explicitly so far but expected Loan funds €300bn in
Slide 14: European Businesses Are Exposed to Sovereign Spreads, Especially in Italy
EUROPEAN BUSINESSES ARE EXPOSED TO SOVEREIGN SPREADS, ESPECIALLY IN ITALY Italy: Impact on the ROE (%) of SMEs Net debt to total assets ratio resulting from higher average cost of debt (sources: Eurostat, Coface) Transport 6 Italy 46,1 SMEs 5 Small Spain 34,9 4 3 Germany 26,4 2 France 23,4 1 0 20 40
Slide 15: Shock #3: Oil Exporting Countries, Back to 2015
SHOCK #3: OIL EXPORTING COUNTRIES, BACK TO 2015 Oil exporting countries: Estimated fiscal oil breakeven price in 2020, in USD 200 180 Fiscal breakeven 160 140 Coface oil price forecast 120 100 80 60 40 20 0 Sources: National authorities, IMF, Coface
Slide 16: COVID-19: What Long-Term Consequences for Businesses?
COVID-19: WHAT LONG-TERM CONSEQUENCES FOR BUSINESSES? • Greater political and debt crisis risks in emerging markets • Faster « Japanization » of the world economy • Both corporate and public debt will increase further • Central banks will play a pivot role to support the private sector: • Direct sup