Business News of Friday, 15 February 2013

Source: Daily Guide

PBC records reduced growth

Produce Buying Company (PBC) registered reduced growth in the volume of cocoa purchases, total revenue and operating profit for the 2011/2012 financial year.

Net profit-before-tax reduced by 63.6 percent from GH¢37.434 million to GH¢13.725 million.

Joseph Osei Manu, Deputy managing Director in charge of Finance and Administration, who made this known in a presentation at the ‘Facts Behind the Figures’ programme in Accra, said the company achieved comparatively poor performance in the year under review as compared to the previous year due principally to unfavourable weather conditions that impacted negatively on national cocoa production.

“PBC also had to contend with higher than expected finance costs attributable to the rather volatile finance environment in which the company operated during the year.

This resulted in the company being faced with unexpected high costs from loans and overdrafts for cocoa purchases while the margin per tonne paid by the Cocobod for cocoa delivered has remained fixed for the last three years.

“It is the resolve of the management and board to adopt the needed measures to continue to search for financing options that will be more favourable to our operations, with the aim of cutting down cost drastically and increasing revenue and growing profits for higher return on shareholders’ investments in the years ahead.”

Turnover for cocoa operations decreased from GH¢1.285 billion to GH¢1.147 billion, a decrease of 10.7 percent due to the decrease in the volume of cocoa purchased and delivered.

With a reduction of 13 percent in national cocoa purchases from 1,011,880 tonnes in 2010/2011 to 879,240 tonnes in 2011/2012 mainly due to unfavourable weather conditions, the company’s purchases similarly reduced by 17 percent from 374,858 tonnes in 2010/2011 to 312,312 tonnes.

This level of purchases culminated in a market share of 35.5 percent as against 37 percent recorded in the previous year.

Turnover for the haulage services decreased from GH¢16.889 million to GH¢15,657 million, a decrease of 7.3 percent due to the increase in the quantity of cocoa hauled at the secondary level by PBC’s articulated and cargo trucks.

Direct cost of haulage service however increased marginally from GH¢8.302 million to GH¢8.511 million, an increase of 2.5 percent as a result of some additional expenditure required to service aged vehicles.

Cost of sales for cocoa operations decreased by 10.56 percent from GH¢1.159 billion to GH¢1.036 billion mainly due to the decrease in the quantity of coca purchased and delivered.

Out of the turnover and the associated cost of sales, the company recorded a gross profit of GH¢118.187 million as compared to last year’s gross profit of GH¢134.803 million, a decrease of 12.3 percent.

Direct operating expenses increased marginally by 0.2 percent over the previous year’s figure of GH¢43.685 million to GH¢43.774 million.

General and administration expenses rose by 7 percent from GH¢24.738 million to GH¢26.463 million.

This was mainly attributed to increase in staff salaries and estate and property cost to rehabilitate the company’s sheds and depots.

Office cost however reduced by a 10.9 percentage point.

Total expenses (excluding financial cost) increased by 2.65 percent from GH¢68.423 million to GH¢70.237 million.

The company registered an operating profit before financing cost of GH¢60.899 million compare to the previous year’s figure of GH¢71.998 million, a decrease of 15.4 percent.

Net financing cost also increased by 36.5 percent from GH¢34.563 million to GH¢47.174 million attributed mainly to the company’s reliance on overdrafts and other short term loans to augment funds for cocoa purchase.

“The inability to access recycle funds usually compelled PBC to seek overdrafts and short-term loans to ensure continuous cocoa purchases to help stay competitive in the industry.

Sometimes, the company also found it difficult to get paid up on time by Cocoa Board for cocoa delivered and be paid for.

“We can recall vividly that at the end of 2011/2012 main crop season, after the full payment of Cocoa Board loan, Cocoa Board was indebted to PBC to the tune of about GH¢75 million.

Strangely enough, the company was paid this amount on 30th September, 2012, three clear months during which time the company was paying interest on borrowed funds that were being used to continue purchases.”