NGX Blames 2023 Polls, Naira Scarcity For revenue Dip

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According to the Nigerian Exchange Group, the most recent general election and the Central Bank of Nigeria’s Naira redesign strategy had a negative influence on its top-line revenue, which fell by 20.5% to $1.33 billion in the first quarter of 2023 from Q1 2022 revenue of $1.67 billion. Its unaudited results for the first quarter ending March 31, 2023, made this disclosure.

According to the company, it saw “a 14.2% year-over-year fall in gross earnings to 1.56 billion (Q1 2022: 1.82 billion), led by a 20.5 percent decline in sales during a period of heightened economic and socio-political instability. However, other income increased by 57.7%, making up for the revenue decline.

“The group’s top-line revenue fell by 20.5 per cent driven primarily by reduced business transactions and consumer spending that resulted from the recently concluded general election and the CBN’s attempt to phase out Nigeria’s old higher denomination of banknotes.”

Due to fewer commercial operations, transaction fees, which made up 51.5% of revenue, fell by 30.6% YoY to 685.9 m (Q1 2022: 988.1 m). government investment income, which accounts for 31.1% of total revenue, decreased to 414.7 million in Q1 2023 from 520.5 million in Q1 2022, principally as a result of substantially lower yields on the Group’s portfolio of government investments as a result of unfavorable market circumstances and uncertainty surrounding the general election.

However, the Group saw a growth in listing fees of 44.6%, from 123.9 million in Q1 2022 to 179.2 million in Q1 2023. The rise in domestic businesses’ need for listing services was what caused listing costs to rise. Additionally, NGX Real Estate’s rental income, which accounts for 2.7% of total revenue, increased by 32.2% to $36.0 million in Q1 2023 from $27.2 million in Q1 2022. Other costs, including trading floor rent, broker annual fees, dealing licenses, and membership, decreased by 1.2% to $16.5 million in Q1 2023 (Q1 2022: $16.9 million).

NGX Group’s profit before income tax expense increased by 21.5 per cent YoY to ₦412.2m in Q1 2023 from ₦339.2m in the corresponding period in 2022 due to an improved share of profit-equity accounted investees and a fall in finance cost. Profit for the period recorded a 109.0 per cent increase to ₦310.0 m in Q1 2023 from ₦148.3 bn in Q1 2022, resulting in significant growth in profit after tax margin to 23.3per cent in Q1 2023 from 8.9per cent recorded in Q1 2022.

Commenting, the Group Managing Director/Chief Executive Officer, Oscar Onyema, said, “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 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.”

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