Cocoa Processing Company (CPC), majority state-owned company, with the most advanced processing plant in Africa, is in a sorry financial state and risks folding up soon because of a $50 million debt overhang owed COCOBOD, which supplies CPC with cocoa beans.
Investors are likely to lose part, or all, of their investments in the company if immediate measures are not put in place to halt the crippling company from collapsing.
CPC has not declared any dividend over the past 10 years, and its financials are not showing any recovery.
Insiders have told The Finder that the company, with annual grinding capacity of 64,500 tonnes, is set to declare huge losses for last year as it processed a mere 8,000 tonnes of cocoa beans, compared to the 20,000 tonnes in 2014 and 20,979.406 tonnes in 2013.
Ever since the expansion of the company to 64,500 tonnes, the company’s highest production was 30,000 tonnes, an indication that the expansion has not served its purpose.
According to insiders, the 284 full-time workers have expressed fear that what management calls routine maintenance to resolve operational challenges was just a ploy to lay them off due to the abysmal performance and dire financial stress facing the company.
Last week, CPC closed its two main plants, which have a total annual grinding capacity of 64,500 tonnes and produce semi-finished products, including cocoa butter, liquor and powder, for export, mainly to Europe.
However, a smaller confectionery factory which produces chocolates, which constitute 10% of the company’s total capacity, remains open.
Ready market for CPC products around the world for the production of pharmaceuticals and confectionaries exists while powder and cake are sold on the local market.
Just last month, the union has to stop management from recruiting six new senior staff at a time production had dropped drastically.
CPC, which was listed on the Ghana Stock Exchange in 2003, owes at least $50 million in arrears to COCOBOD for raw beans supplies.
COCOBOD blacklists CPC
The insiders said COCOBOD decided in January to blacklist CPC due to its mounting debts, forcing the company to buy beans on the more expensive open market, a situation they said potentially placed further stress on its financials.
Not even an escrow account created by CPC and COCOBOD for proceeds from exports to be lodged for COCOBOD to recover cost of cocoa beans could salvage the company.
Dumsor killing CPC
In February 2015, Nana Oduro Owusu, Managing Director of CPC, said the company halts productions for at least two days every week due to the persistent power outage.
“Whenever there is power cut, we stop production; production halts! When the factory is off for about two days, it means stopping production for two days,” he said.
Nana Oduro said a factory like CPC could not be run on generators since the cost of diesel to power a generator for its operations was unthinkable.
He said the generator was used to run the office and other small businesses, stressing that “to run all the machines on it, no!”
The MD said the power outage made it difficult for his outfit to stock the factory with the needed amount of chocolate for the National Chocolate Day celebration last year.
He said even though they could have produced more to be stocked for the occasion, the power outage made it impossible.
40% drop in turnover
The company’s turnover fell to $36.4 million in 2014 compared to $60,186,136 in 2013, and this represents a decrease of 39.52%.
Turnover for 2015 is expected to be less than $15m as the company processed just 8,000 tonnes of cocoa beans while overhead costs skyrocketed.
The company reported a loss of $16.3 million in 2014 compared to $11.8million in 2013.
It is projected that losses may exceed $20 million in 2015 even though the figures are not out yet.
CPC’s liabilities as of September 2014 stood at $60.1 million, up from $48.4 million in the previous year.
Its chocolate varieties include Tetteh Quarshie Bar, Kingsbite, Oranco Bar, Akuafo Bar, Portem Pride, Portem Nut, Coffeechoc, Choco-Bake, Choco Delight (chocolate spread), Groundnut Coated with Chocolate (Pebbles), Chocolate dragees and Royal Natural Cocoa Powder.
Products and Services
The cocoa factory processes raw cocoa beans into semi-finished products – cocoa liquor, butter, natural/alkalized cake or powder – whilst the confectionery factory manufactures the Golden Tree chocolate bars, couverture, pebbles (chocolate coated peanut), VITACO and ALLTIME drinking chocolate powder, ChocoDelight (Chocolate spread), Choco Bake and Royale natural cocoa powder.
The CPC factories process only the choicest premium Ghana cocoa beans without any blending, probably the only factory in the world which can make such a claim.
Ownership of Business
CPC, formerly wholly-owned by the state, was partially privatised after the government offloaded 25 per cent of its stake and listed it on the Ghana Stock Exchange in February 2003.
The government owns about 48 per cent of CPC’s shares, with state-run industry regulator Ghana Cocoa Board controlling about 22 per cent.
Currently, CPC exports about 95 per cent of its semi-finished products to Europe and the Americas.
The Cocoa Processing Company is a Ghanaian cocoa processing company formed in 1981.
Source: The Finder
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