FTN Cocoa Processors Plc Q2/ H1 Result – Significant Loss Reduction but Still Under Pressure

Subject: FTN Cocoa Processors Plc — Riding the Cocoa Boom Amid Financial Volatility

In the backdrop of a global shift in commodity demand, climate-driven disruptions, and renewed focus on food security, Nigeria is making a formidable return to the international cocoa scene. The country’s cocoa export earnings soared from ₦171 billion in 2023 to ₦2.71 trillion in 2024—a staggering 1,486% increase—marking a pivotal shift in the nation's agro-economic narrative.

At the centre of this resurgence is FTN Cocoa Processors Plc, a long-overlooked player now drawing attention from investors and analysts alike.

📊 Key Highlights

1. Remarkable Revenue Recovery

• FTN Cocoa posted ₦1.38 billion in Q4 2024 revenue after reporting zero revenue in 2023—highlighting a successful restart of operations, most likely due to elevated global cocoa prices and improved export infrastructure.
• Q1 2025 also showed continued momentum with ₦572 million in revenue—a 100% YoY growth—though coming off a low base.

2. Profitability Remains a Red Flag

• Despite rising revenues, profit after tax declined from ₦10.65 billion to ₦9.53 billion in 2024, and further to ₦575.5 million in Q1 2025.
• Loss per share is narrowing (from ₦2.70 in 2023 to ₦0.15 in 2025 Q1), indicating cost optimisation and efficiency improvements, but losses remain persistent.

3. Asset Base Strengthening, But Liabilities Growing

• Total assets increased to ₦21.09 billion in 2024 (from ₦13.25 billion), driven largely by asset revaluations—likely related to land or plant reappraisal amid rising cocoa values.
• However, liabilities rose from ₦17.65 billion to ₦18.52 billion by Q1 2025, tightening the company’s financial flexibility.

4. Shareholders’ Funds Eroding

• Despite some operational gains, shareholders’ equity dropped from ₦3.44 billion to ₦2.12 billion, a concern for long-term value preservation.

5. Market Sentiment Remains Watchful

• Stock price is currently ₦4.67, slightly off its 52-week high of ₦5.20, reflecting cautious optimism. The stock remains one of the most-watched agro-equities on the NGX.

🧭 Investment Outlook

Stock Rating: HOLD, with Bias to ACCUMULATE 12-Month Price Target: ₦6.20 (speculative, based on recovery assumption) Sector Outlook: POSITIVE

✅ Reasons to ACCUMULATE

• Sector Tailwinds: Soaring global cocoa prices amid West African supply disruptions position Nigeria—and FTN Cocoa—for growth.
• Operational Reawakening: Return to revenue signals latent capacity and business revival.
• Asset Revaluation: Strong balance sheet uplift from rising asset valuations.
• EPS Trend Improving: Though still negative, loss per share is shrinking steadily.

❌ Reasons to SELL

• Sustained Losses: Declining profit metrics remain a major concern.
• Weakening Equity Position: Shareholders’ funds are eroding—raising red flags.
• Rising Debt Load: Increasing liabilities could pressure operations if cocoa prices correct.
• High Volatility: Significant operational and earnings unpredictability remains.

📝 Final Take

FTN Cocoa Processors Plc is a high-risk, high-reward equity positioned at the intersection of a national agro-export revival and a global commodity boom. For long-term strategic investors with a strong risk appetite, the current price offers potential entry-point value, especially as Nigeria reclaims its place in the global cocoa market.

However, investors must tread carefully. Until FTN achieves sustainable profitability and improves balance sheet stability, short-term caution is warranted.

In the race to monetise Nigeria’s cocoa resurgence, FTN Cocoa stands as both a promise and a puzzle—offering upside potential for the patient, but posing pitfalls for the risk-averse.

Let me know if you’d like this turned into a one-pager or investor brief.Subject: FTN Cocoa Processors Plc — Riding the Cocoa Boom Amid Financial Volatility

In the backdrop of a global shift in commodity demand, climate-driven disruptions, and renewed focus on food security, Nigeria is making a formidable return to the international cocoa scene. The country’s cocoa export earnings soared from ₦171 billion in 2023 to ₦2.71 trillion in 2024—a staggering 1,486% increase—marking a pivotal shift in the nation's agro-economic narrative.

At the centre of this resurgence is FTN Cocoa Processors Plc, a long-overlooked player now drawing attention from investors and analysts alike.

📊 Key Highlights

1. Remarkable Revenue Recovery

• FTN Cocoa posted ₦1.38 billion in Q4 2024 revenue after reporting zero revenue in 2023—highlighting a successful restart of operations, most likely due to elevated global cocoa prices and improved export infrastructure.
• Q1 2025 also showed continued momentum with ₦572 million in revenue—a 100% YoY growth—though coming off a low base.

2. Profitability Remains a Red Flag

• Despite rising revenues, profit after tax declined from ₦10.65 billion to ₦9.53 billion in 2024, and further to ₦575.5 million in Q1 2025.
• Loss per share is narrowing (from ₦2.70 in 2023 to ₦0.15 in 2025 Q1), indicating cost optimisation and efficiency improvements, but losses remain persistent.

3. Asset Base Strengthening, But Liabilities Growing

• Total assets increased to ₦21.09 billion in 2024 (from ₦13.25 billion), driven largely by asset revaluations—likely related to land or plant reappraisal amid rising cocoa values.
• However, liabilities rose from ₦17.65 billion to ₦18.52 billion by Q1 2025, tightening the company’s financial flexibility.

4. Shareholders’ Funds Eroding

• Despite some operational gains, shareholders’ equity dropped from ₦3.44 billion to ₦2.12 billion, a concern for long-term value preservation.

5. Market Sentiment Remains Watchful

• Stock price is currently ₦4.67, slightly off its 52-week high of ₦5.20, reflecting cautious optimism. The stock remains one of the most-watched agro-equities on the NGX.

🧭 Investment Outlook

Stock Rating: HOLD, with Bias to ACCUMULATE 12-Month Price Target: ₦6.20 (speculative, based on recovery assumption) Sector Outlook: POSITIVE

✅ Reasons to ACCUMULATE

• Sector Tailwinds: Soaring global cocoa prices amid West African supply disruptions position Nigeria—and FTN Cocoa—for growth.
• Operational Reawakening: Return to revenue signals latent capacity and business revival.
• Asset Revaluation: Strong balance sheet uplift from rising asset valuations.
• EPS Trend Improving: Though still negative, loss per share is shrinking steadily.

❌ Reasons to SELL

• Sustained Losses: Declining profit metrics remain a major concern.
• Weakening Equity Position: Shareholders’ funds are eroding—raising red flags.
• Rising Debt Load: Increasing liabilities could pressure operations if cocoa prices correct.
• High Volatility: Significant operational and earnings unpredictability remains.

📝 Final Take

FTN Cocoa Processors Plc is a high-risk, high-reward equity positioned at the intersection of a national agro-export revival and a global commodity boom. For long-term strategic investors with a strong risk appetite, the current price offers potential entry-point value, especially as Nigeria reclaims its place in the global cocoa market.

However, investors must tread carefully. Until FTN achieves sustainable profitability and improves balance sheet stability, short-term caution is warranted.

In the race to monetise Nigeria’s cocoa resurgence, FTN Cocoa stands as both a promise and a puzzle—offering upside potential for the patient, but posing pitfalls for the risk-averse.