FTN Cocoa Processing plc, a Nigerian producer of fast-moving consumer goods such as chocolate from cocoa, is reeling from economic pressures as it posted a loss of 108 percent between January and March 2021.
FTN’s loss for the period surged by 108 percent to –N162 million from -N78 million in the previous corresponding period while its gross loss stood at N56 million representing a 10 percent difference from the N62 million loss achieved in 2020.
Furthermore, its financial position worsened as its loss margin increased by 231 percentage points, moving from 57 percent to 288 percent in 2021.
The company’s revenue which is gotten from the sale of its products locally and via export dropped significantly by 59 percent moving to N56million in 2021 from N136 million in 2020.
Export activities of the firm suffered during this period as it recorded no income hence all of its revenue was gotten from the local sale of cocoa powder, cocoa butter, and cocoa liquor.
Its cost of sales also declined by 43 percent to –N112 million from –N198 million in the previous year while its distribution cost declined by 81 percent to –N1.4 million from –N7.4 million in the previous year.
The company’s assets as well dropped marginally by two percent from N4.6 million to N4.5 million in 2021.
Economic headwinds and low profitability also impacted the company’s workforce as its number of employees dropped from 83 in 2020 to 73 in 2021, hence its employee benefit cost was cut by 11 percent to N10.5 million from N11.8 million in the previous year.
Cocoa is a product that is traded in the commodity market and can be a major source of foreign exchange earnings to the Federal Government, but this could be farfetched if companies like FTN are struggling.
Data from The International Cocoa Organization (ICCO) shows that over the years, cocoa production in Nigeria declined to 210,000 metric tons in 2017 despite the increasing demand for the product ranking it 6th among cocoa-producing countries globally with a production accounting for 5 percent of total market share.
The major export destinations of Nigeria’s cocoa beans are Netherlands, Germany, Indonesia, Malaysia and Belgium where it is converted into products like chocolate, meal spread, Choco drink, etc.
Cocoa farmers in Nigeria have been facing challenges such as high costs of maintaining farms against pest and disease attack, and difficult bargaining power force continues to impede growth potentials.
Experts affirm that annually cocoa farmers in Nigeria lose between 30 percent and 70 percent of their cocoa farms to pests and diseases. Also, the inability of the farmers to get acquainted with new, more efficient farming techniques has lowered crop yields and incomes.
During the pandemic, prices of cocoa experienced a pendulum-like movement, mostly dropping than rising, in addition to this, the demand for chocolate fell further affecting the cocoa market.
FTN’s share price closed at N0.42 on the floor of the Nigerian Stock Exchange at the close of trading on Friday.