Computer Warehouse Group posts N230m losses in 1Q 2015

Computer Warehouse Group (CWG) plc, a Nigerian technology company, started year 2015 with an after tax loss, analysis of its financial statement shows.

The company that recently got listed on the country’s stock exchange has been recording faltering performance based on BusinessDay analysis.

For the first three months through March 2015, CWG recorded a loss after tax of N230 million from a profit position of N9.9 million in the same period of the corresponding year (Q1) 2014. The company has been struggling with rising costs that outweigh sales, resulting in low gross and profit margins.

CWG’s cost of sales increased by 14.20 percent to N3.25 billion in 2015 as against N2.85 billion in 2014, as the company struggles with weak consumer demand, slump in oil price and rising energy costs.

Cost-of-sales ratio moved to 83.98 percent in 2015 as against 80.73 percent in 2014. The 83.93 percent cost-of-sales ratio means the company spent N0.8393 to create each unit of sales.

The company is not efficient in managing effectively direct costs attributable to projects as gross profit reduced by 9.9 percent to N611.50 million in 2015, while gross profit margin fell to 15.80 percent in 2015, compared with 19.20 percent in 2014.

IT companies in Africa’s largest economy and oil producer have been hit by a slump in oil price by 40 percent that forced policy makers to devalue the naira. The challenging operating environment may hinder CWG’s goal of becoming the biggest cloud-computing provider in Africa by the end of 2015.

CWG has a target to generate 75 percent of sales from cloud services by 2019, up from 15 percent now, with small and medium-sized businesses being the main customer base, according to the company’s website.

The company’s total assets were up by 9.53 percent to N14.94 billion in 2015, from N13.64 billion the previous year. CWG’s share price closed at N4 on the floor of the NSE, while market capitalisation was N10.01 billion.

 

BALA AUGIE