FTN Cocoa Processing plc, one of the agriculture firms quoted on the floor of the Nigerian Stock Exchange (NSE) had first quarter (Q1) profit dampened by spiralling input cost, analysis of the financial statement shows.
For the first three months through Mach 2014, the company posted a loss of N90.83 million, while revenue increased by 101.04 percent to N151.89 million. The reason for the dwindling bottomline performance was as a result of huge production cost that swallowed most of the firm’s revenues.
Cost-of-sales margin was as high as 132.15 percent in the period Q1 2014; however, this is lower than 184.97 percent the preceding period while cost of sales spiked by 23.13 percent to N200.72 million.
Analysts say the mounting costs highlight the urgent need for the company to put in place cost control mechanisms that will enable it revert to the path of profitability.
FTN Cocoa couldn’t manage direct costs attributable to project as it recorded a negative gross profit of N48.82 million in the period under review.
Operating expenses were up by 82.49 percent to N84.53 million in Q1 2014, as against N46.32 million as of Q1 2013.
Despite the challenges facing the company, the future is stellar and bright as the Nigeria agric minister, Akinwunmi Adesina said in September 17 note said the cocoa crop in Africa most populous and largest economy Nigeria will more than double in three years after farmers were supplied with better yield.
It is expected that within a couple of years output is expected to grow to as much as 800,000 metric tons.
In other to bolster its processing capacity, FTN has started a programme called Africa Cocoa Initiative aimed at connecting processors and off-takers in Europe and America.
Cocoa is a product that is traded in the commodity market and can be a major source of foreign exchange earning to the Federal Government, but this could be farfetched if companies like FTN are struggling.
Nigeria is the fourth largest producer of the chocolate ingredient, after Ivory Coast, Ghana and Indonesia.
The company reduced interest costs as finance cost fell by 29.32 percent to N15.38 million in Q1 2014, from N21.76 million as of Q1 2013, while total borrowings increased by a single digit 3.2 percent to N2.16 billion
Total assets were up by 3.88 percent to N4.40 billion in 2014, as against N4.55 billion in 2012.
The company’s share price closed at N0.50 on the floor of the NSE, while market capitalisation was N1.12 billion.
BALA AUGIE
