FTN Cocoa trapped in a decade-long cash drain as losses persist despite revenue rebound

FTN COCOA Processors Plc has remained stuck in a prolonged cycle of losses stretching more than a decade, with little sign of a sustained turnaround despite a sharp improvement in revenue. The company reported a loss after tax of N273.397 million in 2025, extending a troubled financial history that dates back to 2011.

Originally incorporated as Fantastic Traders Nigeria Limited in 1991, the company entered the cocoa processing space in 1995 through a third-party arrangement with Stanmark Cocoa Processing Company Limited, converting cocoa beans into butter and powder. While early operations showed promise, its financial trajectory has since deteriorated into a pattern of recurring losses.

The downturn became evident in 2011 when the company posted a loss of N243.808 million. Losses deepened to N405.98 million in 2012, before easing slightly to N286.076 million in 2013 and rising again to N291.394 million in 2014. Although there was a brief reprieve in 2015 with losses narrowing to N39.065 million, the relief proved short-lived.

By 2016, losses widened again to N263.352 million and surged further to N419.73 million in 2017. FTN Cocoa managed to cut losses to N76.716 million in 2018, but the volatility persisted. Losses rose to N243.537 million in 2019 and worsened significantly to N514.961 million in 2020.

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The trend continued in the following years, with losses at N214.374 million in 2021 and N431.187 million in 2022. The situation escalated dramatically in 2023 when losses ballooned to N8.131 billion, climbing further to N9.530 billion in 2024. Although the 2025 loss of N273.397 million represents a sharp reduction, it underscores the company’s ongoing inability to achieve profitability.

FTN Cocoa’s revenue vs cost problem

At the core of FTN Cocoa’s challenges is a persistent mismatch between revenue and costs. The company has consistently struggled to generate sufficient income to offset its cost base, with operating and finance expenses eroding margins year after year.

In 2011, for instance, revenue stood at N836.936 million, almost entirely consumed by cost of sales of N832.457 million. When operating expenses, selling and distribution costs, and impairment losses were factored in, the company recorded an operating loss of N180.287 million. Finance costs of N68.032 million pushed the loss before tax to N243.808 million.

A similar pattern played out in 2012, when revenue of N278.170 million was overwhelmed by cost of sales of N531.572 million, resulting in a gross loss of N253.402 million. Additional operating expenses of N169.884 million, impairment charges, and depreciation further deepened losses. Even with other operating income and marginal dividend earnings, the company still recorded an operating loss of N407.019 million.

Although finance income of N77.446 million provided some relief, it was nearly offset by finance costs of N76.407 million, leaving the company with a loss before tax of N405.980 million. With no tax obligations, the loss carried directly to the bottom line.

More than a decade later, the same structural weaknesses remain. In 2024, FTN Cocoa generated N1.376 billion in revenue but recorded a staggering pre-tax loss of N10.620 billion, highlighting the scale of cost pressures. After accounting for a tax expense of N58.421 million, the company closed the year with a loss of N9.530 billion.

This persistent underperformance has come despite capital injections, including investment from Norfund aimed at upgrading production capacity and expanding the company’s footprint across the cocoa value chain.

In 2025, revenue surged to N5.648 billion, suggesting improved market activity or capacity utilisation. However, the company still posted a loss of N273.397 million, reinforcing concerns that rising costs continue to erode gains and prevent a return to profitability.

“The figures point to a deeper structural issue,” said a Lagos-based finance analyst, Mr Chuka Obele. “FTN Cocoa is not just facing cyclical pressures, but a long-standing imbalance between income generation and cost efficiency. Until that gap is addressed, the company’s path to sustainable profitability remains uncertain.”

Why Nigeria’s cocoa processors aren’t making money

Several cocoa processors in Nigeria aren’t making money. Economy Post reported recently that cocoa processor Multi-Trex Integrated Foods Plc has remained in sustained losses since it was taken over in 2011 by the Asset Management Corporation of Nigeria (AMCON) from its founder, late Dimeji Owofemi.

Investigations by Economy Post show that the management installed after the takeover has yet to restart cocoa processing at the company nearly 15 years later. Suppliers who once worked with the firm have largely abandoned it, while the company, once regarded as Nigeria’s biggest cocoa processor, no longer processes cocoa due to the absence of functional equipment.

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Analysts say that Nigeria’s cocoa value chain is inefficient due to high cost of energy, bad roads, poor storage and weak logistics. They say high operating costs are working against processors, as the prices of diesel and petrol rise, noting that most cocoa farmers have limited access to finance and operate on small hectares of land.

Cocoa prices are currently low. But Executive Director of FTN Cocoa, Mr. Akin Laoye, said that while the decline in cocoa prices should have eased cost pressures for processors, the benefits have been wiped out by weak demand and rising operating expenses.

He explained that energy costs, in particular, have worsened the company’s position. “Previously, about 30 percent of our operational costs went into power generation, but the spike in diesel prices has pushed that figure to 35 percent,” Laoye told BusinessDay.