FTN Cocoa Processors Plc is considering offering equity stake to strategic private investors to raise much-needed working capital as the cocoa-processing company continued to struggle with losses.

Sources in the know said FTN may undertake a private or special placement to raise new funds to bolster its working capital and support current efforts to optimise the operations of the company.

FTN's shareholders' funds had declined from N637.15 million in 2017 to N67.78 million in 2018, leaving the company struggling to meet the capital requirements for enlarged operations.

The audited report and accounts for the year ended December 31, 2018 showed that the agro-allied company grew its turnover by 636 per cent from N81.82 million in 2017 to N602.11 million in 2018. However, FTN recorded gross loss of N284 million in 2018, compared with a gross loss of N251 million in 2017. Net loss stood at N569.37 million in 2018 as against N762.42 million in 2017. Loss per share stood at 26 kobo in 2018 as against 35 kobo in 2017.

Directors of the company attributed the negative bottom-line to inadequate working capital that has continued to hinder the company's operations.

The board of the company also blamed high cost of production and high finance expense for the negative performance, noting that inadequate working capital hindered the company from procuring raw materials needed to facilitate optimum production.

While the company had reduced operating expenses, finance costs remained reasonably high at N261.18 million in 2018, although a reduction from N377.92 million recorded in 2017.

The board of the company said injection of new capital would support the ongoing turnaround programme and return the company to profitability.

Incorporated in 1991, FTN's principal activities include processing of cocoa beans and palm kernel into cocoa cake, liquor, butter, powder, palm kernel oil and palm kernel cake. While it exported cocoa cake, liquor and butter, other products including cocoa powder, palm kernel oil and palm kernel cakes are marketed locally to manufacturing companies.

FTN started as Fantastic Abiola Nigeria Limited in 1991 and changed to Fantastic Traders Nigeria Limited in August, 1998. It adopted the current name FTN Cocoa Processors in December, 2007 and converted to a public limited liability company in February, 2009. FTN was listed on the Nigerian Stock Exchange in July, 2009.

© Pakistan Press International, source Asianet-Pakistan