NGX Group’s Cost-saving Strategies Lift Q1 2023 Net Profit by 109%

By Aduragbemi Omiyale

The cost-saving strategies implemented by the board and management of Nigerian Exchange (NGX) Group Plc have yielded the expected result.

In the first quarter of 2023, the company recorded a 20.5 per cent shortfall in the revenue generated in the period under review to N1.3 billion from N1.7 billion in the same period of last year.

This was driven by a high economic and socio-political uncertainty as a result of the 2023 general election, cash scarcity and energy crisis, which reduced business transactions and consumer spending.

A critical look into the revenue streams of the firm showed that transaction fees, which accounted for 51.5 per cent of revenue, dropped by 30.6 per cent to N685.9 million from N988.1 million in Q1 2022, as treasury investment income, which contributed 31.1 per cent to the revenue, went down to N414.7 million from N520.5 million, primarily driven by relatively lower yields on the Group’s treasury investment portfolio owing to the unfavourable market conditions and uncertainties during the general election period.

However, other income grew by 57.7 per cent to N233.4 million in the first three months of this year from N148.0 million in the same time of last year as a result of more earnings from sundry, other sublease, and penalty fees, which all cumulatively accounted for 65.2 per cent of total other income, offsetting the drop in gross earnings.

On the expenditure side, NGX Group trimmed its total expenses by 10.0 per cent to N1.7 billion from N1.9 billion due to reduced personnel expenses and a fall in finance costs, with personnel expenses down by 9.95 per cent to N629.0 million in Q1 2023 from N698.0 million in Q1 2022.

It was observed that salaries and other staff benefits, which accounted for 93.4 per cent of personnel expenses, went down by 8.7 per cent to N588.1 million from N644.3 million due to streamlined operations and improved efficiency.

But the operating expenses grew by 13.9 per cent to N390.8 million from N343.0 million as a result of increased operational activities amidst the group’s preparation for the full physical resumption of office.

Business Post reports that EBITDA fell in the period by 30.3 per cent to N545.8 million from N783.5 million, while EBIT dropped 29.8 per cent to N456.1 million from N649.9 million.

The cost-saving initiatives, especially a drop in finance cost of the organisation, contributed to 21.5 per cent growth in the pre-tax profit to N412.2 million from N339.2 million, while the net profit jumped by 109.0 per cent to N310.0 million from N148.3 billion, resulting in significant growth in profit after tax margin of 23.3 per cent versus the 8.9 per cent recorded in Q1 2022.

“Despite the challenging macroeconomic environment during the quarter amidst cash and energy scarcity, and political tension from the 2023 elections, the Group remained resilient.

“We are pleased to announce a 109 per cent increase in net profit, achieved through the implementation of cost-saving measures that minimised the impact of revenue reduction, just as we are exploring new and innovative ways to capture more market share and appeal to a broader demographic.

“The group will continue investing in innovative marketing strategies to appeal to the changing consumer preferences, as well as explore opportunities to expand the product line, portfolio mix, and penetrate new markets.

“We stay committed to our long-term growth strategy and are confident in our ability to navigate the current challenging environment and create value for our stakeholders,” the chief executive of NGX Group, Mr Oscar Onyema, said.