NCR revert to profitability backed by cost reduction

Background

NCR has been in Nigeria since 1949 and is a front runner in the provision of Self-Service Financial, Payments and Retail solutions. It was the first company to introduce ATMs in the country and has the largest ATM installed base in the country.

NCR Corporation is a global technology company leading how the world connects, interacts and transacts with business. NCR’s assisted and self-service solutions and comprehensive support services address the needs of retail, financial, travel, healthcare, hospitality, entertainment, and gaming and public sector organizations in more than 100 countries.  The Corporation is headquartered in Duluth, Georgia.

The company was listed on the floor of the Nigeria Stock Exchange on May 30, 1979.

NCR has 108.0 shares outstanding with net assets of 138.25 million as at December 31 2013.

Financial results for 2013

NCR despite the economic challenges such huge operating cost and political instability in the North East region of the country was able through savvy management of res  focus strategy  revert to profitability as shown in its Full Year results.

For the year ended December 2013, the company’s revenues declined slightly by 5.57 percent to N6.10 million from N6.46 billion same periods in the prior year (FY12).

The company however  moved to a profit position of N104.87 million in FY13 from a loss position of N1.14 billion as at FY2012.

The focal point of the remarkable turnaround was the ability of the management of NCR to cut cost through an effective and efficient cost control measures.

Cost of sales declined by 20.04 percent to N5.93 billion in the review period as against N7.42 billion as at FY12, while cost of sales margin dipped to 97.1 percent in FY13 from 114.86 percent as at FY12.

Furthermore, operating expenses reduced by 53.45 percent to N105.21 million compared with N225.82 million as at FY12.

NCR total assets were up slightly by 3.5 percent to N5.54 billion in FY13 as against N5.35 billion as at year end 2012.

Current ratio, which measures the ability of a firm to meeting its short-term obligation as at when due fell to  0.74:1 in 2013 from 0.78:1 in 2012 this however is  lower than the industry average of 2.0:1)

Sales turnover in the review period was1.10x.This means NCR generates sales of N1.10 for every one Naira of sales invested in total assets.

Debtors and receivables were up by 46.92 percent to N2.31 billion compared with N1.57 billion as at FY12, while the collection period was 116 days.

The company should put measures in place to speed up monies owned to it by customers because delay in collection impairs liquidity.

In other to improve the quality of service to customers, the company was able to secure significant orders for upgrading projects in cheque clearing and National Electronic Funds Transfer to assist with internal image clearing and decision making.

In addition, it also introduced ATM Passport (Cheque Image Capture solution) and the Branch Passport (Cheque Capture solution for Bank branches).

With the improved contribution of the telecommunication sector to the Nigeria economy in the just rebased exercise and the over 64.1 percent of the 170 million populations unbanked, the opportunities that awaits NCR are enormous.

The telecommunications and information services sector contributed 8.68 percent to the Nigerian economy equivalent to N6.97 trillion ($44.3 billion) out of the total rebased GDP estimate of N80.22 trillion ($510 billion).

This compares with N364.4 billion ($2.3 billion) in the 2012 non-rebased GDP time series.

Telecommunications is the star performer in Nigeria’s rebased GDP figures.

The company share price closed at N15.99 on the floor of the Nigeria Stock Exchange, while market capitalization was N1.72 billion.

 

BALA AUGIE