eTranzact International plc’s recorded profit margins expansion and increased sales in the second half of this year, indicating that its market penetrating products such as mobile banking and payment services are increasingly paying off despite tough conditions.
The growth at the top lines despite a sluggish economic environment can be attributed to the Information and Telecommunications Company (ICT) firm’s focus, market and advertising strategies, a solid concept and business ideology that gave it competitive edge over peer rivals quoted on the floor of the exchange.
For the first six months through June 2016, eTtranzact’s net margin increased to 10.01 percent from 6.91 percent the previous year. Earnings per share jumped to 11.71 percent in June 2016 as against 6.82 percent last year.
The net margin measures the efficiency and profitability of firms, the lower the ratio, the more efficient a firm. The Nigerian ICT firm has deployed shareholder’s money in generating more profit as return on equity (ROE) increased to 12.67 percent in June 2016 from 8.24 percent as at June 2015.
Net profit was up 71.63 percent to N491.95 million in June 2016 as against N286.63 million as at June 2015. Sales jumped by 20.01 percent to N4.91 billion as the company continues to embark on aggressive expansion with a view to consolidating its share of the market.
The company said the key growth drivers were due to strengthened collaboration with partner banks in driving mobile banking business; strategic alliances with International money transfer operators which is driving growth of remittance business; alliances with government agencies, parastatals and educational institutions which is driving bulk payments; central collection; and, transaction switching and processing business.
Despite eTranzact’s impressive or stellar performance, operators in the industry are grappling with challenges such as apathy for indigenous product and service by consumers.
Analysts say such preference for foreign brands by Nigerians is detrimental to the economy and local operators as the country is creating jobs and dollar revenue for oversea firms while contemporaneously fueling unemployment.
According to documents from the Ministry of Communications, it revealed that major multinational ICT hardware manufacturers such as Samsung, Acer; HP; Dell; Asus; Toshiba and Lenovo among others currently account for 70 per cent of sales in the Nigeria market.
Local Content Bill aimed at the development of skills and transfer of knowledge will help reduce the appetite for foreign brands and spur local companies to growth
Further analysis of the financial statement of eTranzact shows cost of sale increased by 14.72 percent to N3.42 billion as high cost of diesel oil due to unstable power supply from the grid continues to spiral overheads.
However, the company is still efficient as its cost of sales ratio fell to 68.40 percent in 2016 from 72.68 percent as at June 2016. Also, gross profit margin increased to 30.23 percent in June 2016 from 26.88 percent in June 2015.
eTranzact share price close at N6 on the floor of the NSE while market capitalization stood at N25.20 billion.
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