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FTN Cocoa Loss Deepens Despite Improvement in Q3 Revenue

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By Dipo Olowookere

In the third quarter of 2021, FTN Cocoa Processors Plc recorded an expansion in its loss before and after taxes despite recording an improvement in revenue.

According to the financial statements of the company released on Monday, the revenue generated in the first nine months of this year was N278.2 million in contrast to the N227.3 million raked in the same period of last year.

A critical look into this by Business Post showed that this increase in revenue was boosted by local sales of cocoa powder, cocoa liquor and cocoa cake, which all accounted for N144.8 million versus N66.6 million in the first nine months of 2020.

In the period under review, export sales slightly decline as the firm generated N133.4 million from cocoa butter compared with N160.7 million achieved in the same period of last year.

However, it was observed that FTN Cocoa could not trim its cost of sales as this rose to N519.8 million from N475.0 million as the value of its raw materials jumped to N265.7 million from N178.0 million, personnel expenses lept to N52.7 million from N50.9 million, repairs and maintenance of factory building and plant/machinery went up to N7.5 million from N1.4 million, while other direct costs gulped N21.0 million versus N11.5 million a year ago.

As a result of its inability to cut down its cost of sales and operate optimally, the company posted a gross loss of N241.6 million compared with N247.7 million in Q3 of 2020.

It is important to note that FTN Cocoa has been producing below of 5 per cent of installed capacity due to the lingering working capital inadequacy. This impacted on the gross margin as a result of huge fixed cost that has to be borne.

Furthermore, the firm recorded operating expenses of N107.2 million as against N171.0 million in the corresponding period of last year, while the selling and distribution costs stood at N9.0 million in contrast to N11.9 million and with an other operating income of N28.3 million versus N47.0 million a year ago, FTN Cocoa closed September 30, 2021, with an operating loss of N329.6 million compared with an operating loss of N383.6 million.

It also declared a finance loss of N302.0 million compared with the finance income of N33.1 million, while the finance cost jumped to N216.5 million from N1.3 million, leaving it with a net finance loss of N518.5 million as against the net finance loss of N31.8 million in the corresponding period of 2020.

Consequently, it declared a loss before and after taxes of N848.1 million as against the pre-tax and post-tax losses of N351.7 million in Q3 of last year.

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