FTN Cocoa Processors Plc, a Nigerian provider of processed agricultural commodities, has released its unaudited financial statement for the fiscal year ended December 31, 2024, revealing a complex financial picture marked by a significant revenue increase alongside persistent losses and escalating debt. While the company managed to generate N1.38 billion in revenue, a dramatic turnaround from the zero revenue reported in 2023, it still posted a loss after tax of N10.62 billion. This figure represents a negligible improvement from the N10.65 billion loss incurred in 2023, highlighting the ongoing challenges facing the company despite the revenue resurgence. The company’s financial performance continues to be hampered by substantial exchange rate losses and a heavy debt burden, overshadowing the positive impact of increased revenue.
The remarkable 100% surge in revenue from zero in 2023 to N1.38 billion in 2024 suggests a resumption of operations, potentially indicating an easing of the working capital constraints that had previously hampered production. However, this positive development is significantly offset by the substantial exchange loss of N11.68 billion, a 15% increase from the N10.18 billion loss recorded in 2023. This suggests that the company’s operations are significantly exposed to foreign currency fluctuations, a vulnerability exacerbated by the volatile nature of the Nigerian Naira. Although operating expenses decreased by 16% to N407.67 million from N486.31 million in 2023, this cost reduction was insufficient to counter the impact of the massive exchange rate loss and the burden of mounting debt.
The company’s balance sheet reflects a substantial increase in both assets and liabilities. Total assets grew by 51% to N19.95 billion, primarily driven by a 49% increase in property, plant, and equipment, which reached N16.26 billion. This investment in fixed assets suggests a commitment to expanding operational capacity, likely underpinning the revenue growth witnessed during the period. However, this asset growth is mirrored, and indeed surpassed, by a significant increase in total liabilities, which surged by 77% to N17.59 billion. This alarming increase primarily stems from a dramatic 124% jump in non-current borrowings, which reached N17.15 billion compared to N7.66 billion in 2023. This signifies a growing reliance on debt financing, a strategy that carries inherent risks, especially in a context of persistent losses.
The significant increase in borrowings, while potentially contributing to the resumption of operations and subsequent revenue generation, also presents a significant financial challenge. The interest expense associated with this substantial debt load likely contributes significantly to the company’s ongoing losses. While a decrease in current liabilities by 81% to N436.76 million offers a slight positive note, it is dwarfed by the magnitude of the increase in long-term borrowings. This escalating debt burden raises concerns about the company’s long-term financial stability and its ability to service its debt obligations.
The impact of the company’s financial performance on shareholder value is evident in the 28% decline in shareholders’ equity, which fell to N2.36 billion from N3.28 billion in 2023. This erosion of shareholder value is a direct consequence of the continued losses and the increasing debt burden. The company’s loss per share stood at N2.72k, a marginal improvement from N2.73k in 2023, but still indicative of a company struggling to achieve profitability. This persistent negative performance raises concerns about the company’s ability to attract future investment and its long-term viability.
In conclusion, FTN Cocoa Processors Plc’s financial performance in 2024 presents a mixed picture. While the company managed to restart operations and generate significant revenue after a period of inactivity, it continues to grapple with substantial challenges. The massive exchange rate losses, combined with the mounting debt burden, have offset the positive impact of revenue growth, resulting in another year of significant losses and a further erosion of shareholder value. The company’s future prospects will depend on its ability to manage its foreign exchange exposure, control its debt levels, and achieve sustainable profitability. The significant investment in property, plant, and equipment indicates a commitment to future growth, but the company’s success will hinge on its ability to translate this investment into profitable operations.
