PBC records fall in profit; Net profit down 64%, cost of operations up

The company became the first to present its financial results for 2012 to the public through the programme. The initiative, by the GSE, is to give listed companies the opportunity to “factually” explain their end of year performances to the public and stock market followers in particular.

As a result of PBC’S poor financial showing in 2012, the value of its share held by shareholders – the basic earnings per share (EPS) – dropped from 57 GP in 2011 to 21 GP in the year under review. That represented a 64 per cent depreciation within the 12-month period.

The company's market share also shrunk by 1.5 per cent in 2012, falling from 37 per cent in the 2010/2011 cocoa season to 35.5 per cent in the 2011/2012 season.

The Managing Director of the company, Mr Kojo Atta-Krah, admitted in his presentation that PBC’s performance in 2012 was “definitely not pleasing” but blamed it on what he described as “inefficiencies and deficiencies in the operations of the Ghana Cocoa Board (COCOBOD)” and in the cocoa purchasing industry in general, a drop in cocoa output in that year and the high cost of credit in the country.

“We have been relying heavily on debt-financing (loans from banks) and that siphons a reasonable amount of income from us,” the MD said.

He, however, added that although the company had turned its attention to other financing options outside debt-financing, the instability in the financial sector “makes things difficult for us.”

The company’s financial results showed that an average of 35 per cent of its gross profit goes into funding its operations, which is dominated by cocoa purchasing and the MD said such a trend made PBC’s operations unsustainable in the long run.

“What that means is we are working for the banks. In fact, we have become friends to the banks and they always come knocking at our doors to ask if we don’t need credit,” he said.

On cocoa purchases, the MD said the company bought 374,848 tonnes of the bean in the 2010/2011 cocoa season. That represented a 17 per cent decline from the 312,312 tonnes purchased in the 2011/2012 season.

Mr Atta-Krah attributed PBC’s inability to purchase more beans in the 2011/2012 cocoa season to a fall in cocoa production that season.

National cocoa output was 879,240 tonnes in the 2011/2012 season compared to the one million metric tonnes recorded in the season before.

Looking ahead, Mr Atta-Krah said PBC would explore less costly financing options while reducing its cost of operations.

He hinted that the company would soon be seeking the permission of its shareholders to raise about GHC100 million through a rights issue on the stock exchange in a bit to shore-up its capital base.

Story by Maxwell Adombila Akalaare