FTN Cocoa Records Operational Rebound, but Balance Sheet Risks Persist

FTN Cocoa Processors Plc delivered a notable operational recovery, marking one of the strongest year-on-year turnarounds among listed agro-processing companies.

The company’s share price rose sharply over the period, reflecting renewed investor confidence driven by visible improvements in revenue generation and cost control.

For the most recent reporting period, revenue increased significantly, while losses narrowed substantially compared with the previous year. The scale of improvement indicates that the company is beginning to stabilise after a prolonged period of financial stress.

The reduction in losses was supported by stronger sales and improved operating efficiency, even though the company has yet to return to profitability. While gross margins remain under pressure, the pace at which losses are shrinking relative to revenue growth suggests that structural inefficiencies are gradually being addressed.

FTN Cocoa operates within Nigeria’s agricultural export value chain, processing cocoa beans into intermediate products used by domestic and international manufacturers. Its operations support Nigeria’s broader push to move up the value chain and reduce dependence on raw commodity exports.

Despite operational gains, the company’s balance sheet remains under strain. High debt levels and rising liabilities continue to weigh on shareholders’ equity, which has turned negative due to accumulated losses from prior years.

Cash flow performance, however, showed improvement, with the core business generating positive operating cash during the period. Capital expenditure remained modest, reflecting management’s focus on stabilisation rather than expansion.

Ownership of the company is relatively concentrated, providing strategic direction during the turnaround phase. Management execution will remain critical, particularly in managing debt, sustaining revenue growth, and restoring balance sheet strength.

While risks remain elevated, the recent performance suggests that FTN Cocoa has taken its first meaningful steps away from distress toward a potential long-term recovery.