CPC to leverage AfCFTA to turn ill-fortunes around

Global risk-off sentiment
  • Records further loss of US$4.3m in 2019
  • Shareholders still awaiting dividends after many years

Cocoa Processing Company (CPC) Limited hopes to take advantage of the African Continental Free Trade Area (AfCFTA) agreement to turn around the ill-fortunes which have beset the company for many years – leading to the non-payment of dividend ever since it listed on the Ghana Stock Exchange in 2003.

The annual report and financial statement of the company have shown it recorded another loss, of US$4.3 million in 2019, although better than the US$7.2million loss recorded the previous year – a situation shareholders expressed vehement discontent with during the company’s annual general meeting in Accra.

Despite what has historically become a ‘norm’ in the company over the years, management says it is assiduously working to change the narrative by introducing strategies and measures which will increase production capacity and inject new capital into the company to put it in pole position to become viable and profitable, especially at a time when the new continental trade pact offers many advantages.

“We inherited a GH¢180million debt when we took over in 2017. We are passionately appealing for shareholders to exercise some patience with us. We now have the support of government, and gradually we are bringing the debt down. AfriExim is also supporting us with US$70million to retool and replace some of the obsolete parts of our plant and increase our capacity.

“It is going to increase our capacity from 64,500mt to 87,000mt. The confectionary capacity is also going to increase from 3,000mt to 15,000mt. So, we are asking our shareholders to have patience till we turn things around.

“We have started rebranding our confectionary products to make ready for the AfCFTA market. We are also targetting entry into the Chinese market. We have acquired a machine that can process 1 tonne per hour, and we plan on doing 22 tonnes a day. So, after a maximum three years, we expect shareholders to get dividends,” he said in an interview with the B&FT.

Other measures that management said it has taken to restore growth in the company include cost-cutting strategies which include plans to build a 5MW ECT cocoa shell-based steam power co-generation plant and its corresponding accessories. This plant will use cocoa shells, sawdust, firewood, shell cake and rice husk as fuel, and this is expected to cut the company’s annual power cost by US$450,000.

Then again, the company has constructed six deep bore-holes to reduce the cost of water by up to US$222,000 per year.

Besides these, the company plans to invest in infrastructure and machinery; expand revenue the base by securing additional tolling arrangements; rebranding its products; and improving effectiveness and efficiency of operations.

Shareholders’ discontent

The general atmosphere at the AGM revealed shareholders were highly disappointed and upset about persistent losses of the company, which have resulted in non-payment of dividend to them since it listed on the Ghana Stock Exchange. Some attributed this to mismanagement.

One of the shareholders, Lawrence Ala – who said he bought shares the very year the company listed on the Ghana Stock Exchange, lamented that he had never gained even a pesewa from that investment, regretting ever making that choice.

“I have been a shareholder of CPC since it started floating shares. It was an investment my wife and I decided to make. We bought shares worth GH¢4,500 – but ever since we bought the shares, we have received nothing from the company. At a point in time, I wanted to sell off my shares; but I was told the value had dropped to the extent that even if I sell it, I won’t get GH¢10 out of it. Meanwhile, at the time I bought these shares, I could have bought 4 Tico cars. Imagine how much I would have made from that,” he lamented.

Another shareholder, pensioner Daniel Adu Opoku who bought shares in the company in 2003 to cushion him in his retirement, also re-echoed the sentiments shared by Mr. Ala, saying he wished he had invested in a tomato farm or some other business, as he would have been reaping some gains from that investment rather than investing in the shares.

“I have been a shareholder since CPC started floating shares, and the only thing I ever got is the confectionary products they give us after annual general meetings. All the shareholders are very disappointed. If I had invested this money in tomatoes or some other thing, at least I would have gotten something at end of the year. I wanted to sell my shares, but I got to know they have no value. No one will buy them. I bought these shares to cushion me during my pension. And now I am a pensioner but have got nothing out of it,” he said bitterly.

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