FTN’s Akin Laoye on full-year earnings & COVID-19 impact on business

FTN Cocoa Processors, a leading cocoa processing company, has recently released its full-year 2019 earnings, revealing a significant loss after tax of 801.2 million. The company's Executive Director, Akin Laoye, shed light on the factors contributing to this loss in a conversation with CNBC Africa's Esther Awoniyi. Laoye explained that the company faced challenges due to being undercapitalized, which restricted its operations to just 3% capacity. This limitation led to certain expenses not being accounted for in the financials, ultimately resulting in the reported loss for the year. When discussing the impact of the ongoing COVID-19 pandemic on the company's current year, Laoye highlighted the struggle with inadequate cash flow and lack of support from local banks. He also emphasized the difficulties in exporting goods since the onset of the pandemic in March, attributing further delays to port congestion. The cocoa industry, according to Laoye, is currently bearing the brunt of the pandemic's effects, with surplus products sitting in the market due to production halts in origin countries like Nigeria. Looking ahead to 2021, Laoye expressed cautious optimism, mentioning the potential positive impact of recently discovered vaccines on business operations. The company is strategizing a turnaround plan that involves collaboration with foreign investors to expand its market reach and improve financial stability. Laoye assured shareholders of a better outlook for the upcoming year, citing approved agreements with incoming investors as a significant step towards recovery. In response to inquiries about the specifics of the turnaround plan, Laoye highlighted the importance of building strategic partnerships with global players in the cocoa industry. He explained that by engaging with foreign investors, the company aims to gain access to broader markets for cocoa-derived products like cocoa butter and cocoa cake. This global approach would enable FTN Cocoa Processors to sell its goods more efficiently and avoid inventory accumulation issues. Moreover, Laoye emphasized the significance of technology and spare part accessibility in cocoa processing, noting that the company's reliance on imports for essential components has been a challenge. By fostering relationships with overseas partners, FTN Cocoa Processors aims to streamline its supply chain and enhance operational efficiency. Overall, Laoye's discussion highlighted the company's resilience in the face of adversity, showcasing a commitment to navigating the current challenges through strategic partnerships and a forward-looking approach to business development and growth.