CPC’s 50% share price jump: blip or sign of recovery? – analyst quizzes

• as long-running operational inefficiencies persist
• says new leadership must speak to market

By Ebenezer Chike Adjei NJOKU

Cocoa Processing Company (CPC) has broken four years of silence on the Ghana Stock Exchange with a 50 percent surge of its share price in August. The rally, which lifted the stock from GH¢0.20 to GH¢0.30, has made CPC the month’s top gainer and one of the ten best-performing equities year-to-date.

But does the move mark the beginning of a turnaround for the state-owned processor or is it merely a speculative spike against a backdrop of persistent operational and financial strain? Analysts remain cautious, pointing out that the company’s fundamentals tell a less flattering story.

Facts behind the figures?

CPC was founded at Tema in 1965, incorporated as a limited liability company during 1981 and listed on the GSE in 2003. It runs three factories – two for cocoa processing and one for confectionery – with a vision of become “a first-class food factory of international repute” and its mission is “to process cocoa and bring its health benefits to consumers worldwide”.

Despite this, CPC’s share price had been dormant for four years – since August 2021 – as investors shied away from the company, which has been dogged by years of operational and financial strain.

Losses, averaging over US$10million annually between 2021 and 2024, have been driven by declining production, high debt and mounting financing costs. Cocoa beans processed fell by more than half between 2023 and 2024, while semi-finished output and confectionery lines suffered similar drops. Liquidity pressures have deepened, with borrowing nearing US$39million and trade payables rising sharply.

Government interventions have so far been insufficient to reverse the tide. In 2022, COCOBOD converted US$32million of debt into equity to ease the burden, while more recently CPC has pursued a US$86.7million facility from Afreximbank to retool and expand. All of these have hampered its ability to capitalise on domestic cocoa production advantages.

As of June 30, 2025, CPC’s assets fell to US$126.5million from                          US$129.5million a year earlier, while liabilities rose seven percent to                          US$134.6million. This pushed equity into negative territory – at US$8.1million compared with a US$ 4.1million in 2024. Turnover dropped 27 percent to US$16.2million and losses widened to US$10.2million from US$9.6million.

On the operations side, cocoa bean processing was stable at 2,902 metric tonnes and semi-finished products grew four percent to 2,333 metric tonnes, but confectionery output slumped from 1,049 metric tonnes to 737 metric tonnes.

“When you look at their financials, everything you need to know is right there. The cost structure suggests they are not performing well operationally and that’s reflected in their cash flow statements,” explained Head of Pension Management at Merban Capital, Kofi Kyei Busia.

CPC’s struggles are particularly noteworthy given the nation’s broader push toward value addition in the cocoa sector. As the country seeks to move beyond raw commodity exports and develop its processing capabilities, CPC should theoretically be positioned to benefit significantly.

The disconnect becomes more apparent when comparing CPC’s trajectory to other commodity-related investments. While gold-related investments, including ETFs, have shown strong performance and attracted investor interest, cocoa processing has failed to capture similar enthusiasm despite Ghana’s natural advantages in the sector.

The financial analyst recommended a measured approach to CPC despite the recent price surge. The concern is that investors may be drawn to the 50 percent gain without adequately considering underlying fundamentals.

“If you are looking at the stock market from a long-term investment perspective, something really must be done to make this an attractive investment. The recent price movement might look impressive, but the operational challenges have not disappeared,” he cautioned.

Given the heightened market interest, he believes this presents an ideal opportunity for CPC to enhance its investor relations and transparency efforts.

“This would be a very good time for CPC to communicate with investors. They should consider utilising platforms like the Ghana Stock Exchange’s ‘Facts Behind the Figures’ sessions to provide comprehensive updates on their operational improvements, strategic initiatives and future outlook,” he said about the Professor William Coffie-headed institution.

Mr. Busia added that for a company like CPC  (which had its Board recently constituted and Chaired by Naa Dr. Alhassan Andani) and has maintained a relatively low public profile during its four-year price stagnation period, such engagement could prove crucial in building investor confidence.

“There will clearly be some interest with this price movement, but they need substance to support continued investment. A well-structured investor presentation could help bridge the gap between current market enthusiasm and operational reality,” he noted.

Globally

The renewed attention on CPC comes as Ghana’s cocoa sector faces its own pressures. Smuggling has siphoned off an estimated 350,000 tonnes of beans in the 2023–24 season, while Europe prepares to tighten import rules against untraceable cocoa by the end of 2025.

At the same time, global cocoa markets have been in turmoil as prices surged to a record US$12,000 per tonne earlier this year before retreating by over 30 percent, leaving processors and confectionery companies grappling with unprecedented cost pressures.

International firms are already responding. Nestlé has pioneered production methods using more of the cocoa fruit to cut waste and boost farmer returns, while trading houses such as Hartree Partners are seeking acquisitions in West Africa – including a possible takeover of Touton, which handles about 10 percent of global cocoa trade.

Meanwhile, chocolate prices worldwide continue to climb, with consumer costs up by more than 40 percent since 2021.

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