FTN Cocoa Processors Reports Zero Revenue in 2023

Cocoa

FTN Cocoa Processors, one of Nigeria’s long-standing cocoa companies, faced a significant setback in 2023, as it reported zero earnings for the year due to operational challenges stemming from inadequate working capital.

This revelation emerged from the company’s financial statements for the year ended December 2023, which were recently filed with the Nigerian Exchange Limited.

According to the report, FTN Cocoa Processors experienced a complete cessation of production activities, leading to a 100% decline in revenue compared to the N62.19 million it generated in 2022.

“The company’s inability to engage in production activities due to persistent working capital inadequacy has adversely affected its gross margin, primarily due to the substantial fixed costs incurred,” the report stated.

Despite the absence of production and revenue, the company incurred significant expenses, including a cost of sales amounting to N200.49 million, operating expenses of N284.48 million, and an exchange loss of N7.76 billion, a stark increase from N13.30 million recorded in 2022.

Furthermore, finance costs added an additional burden of N105.80 million, resulting in a staggering loss of N8.13 billion, compared to a loss of N431.19 million in the previous year.

On the balance sheet front, FTN Cocoa Processors witnessed an increase in total assets by 82.86%, rising to N13.31 billion from N7.28 billion, while total liabilities surged by 106.77% to N18.26 billion.

In an effort to address its working capital constraints, the company disclosed that it secured a short-term loan facility from Zedcrest Capital Limited to meet urgent financial obligations. Additionally, it noted that its core investor, OH Ecosystem, was injecting funds into the company.

“The company is currently undergoing a facelift of its factory premises and importing spare parts in preparation for the resumption of operational activities,” FTN Cocoa Processors explained.

Earlier in June 2023, the cocoa processor announced that its stakeholders had approved the company’s decision to obtain a convertible loan of $6.35 million from OH Ecosystems LLC. The resolution authorized the company to provide security to Norwegian Investment Fund for Developing Countries and OH Eco, in line with the terms of relevant security documents.

Meanwhile, FTN Cocoa Processors also disclosed that it had issued an 18-year bond in 2008, maturing in 2026, to Daewoo Securities (Europe) with an option for the bond to be converted into ordinary shares of the company at maturity. The proceeds from the bond issuance in 2009 were utilized for the initial expansion of the company, as per the firm’s statement.