Guan Chong managing director and CEO Brandon Tay Hoe Lian
KUALA LUMPUR: Guan Chong Bhd
(GCB) will maintain its focus on its cocoa ingredient processing while venturing into high-margin industrial chocolate and fine-tuning production according to market demands.
The world’s fourth-largest cocoa grinder said the cocoa industry has endured challenges in the global macro environment this year, influenced by factors such as rising interest rates and global inflation.
Besides, the El Niño weather phenomenon, black pod diseases and swollen shoot virus have contributed to reduced supply, thereby resulting in the rally of cocoa prices.
“Despite the challenging backdrop, and even as cocoa prices in the London market reached a record 46-year high, the demand for chocolate products remains resilient.
“The group continues to vigilantly monitor global developments and adapt its growth strategy accordingly for the long-term sustainability of the business. The group foresees that these adverse market conditions are affecting its performance in the short term; nevertheless, it maintains optimism about the long-term outlook,” GCB said.
GCB recorded a 10.1% increase in net profit to RM33.9mil in the third quarter ended Sept 30 (3Q23) from RM30.8mil previously, driven by improved operating profit from its industrial chocolate segment in Germany.
In 3Q23, operating profit from the group’s industrial chocolate segment rose to RM28.7mil, which was a significant improvement from a small loss previously.
The group’s revenue in 3Q23 grew 16.8% to RM1.3bil, from RM1.1bil
previously, as a result of higher average selling prices of cocoa butter and cocoa solids in tandem with the rising cocoa bean prices.
GCB said the higher revenue also helped offset the increased finance cost due to higher interest rates.
“Our strategic venture into the industrial chocolate business, investing in the century-old SCHOKINAG-Schokolade-Industrie, is showing fruition, and contributing meaningfully to the group’s earnings.
“Currently, our new industrial chocolate facility in the UK is undergoing trial operations. Once fully running, we will see additional earnings contributions from the UK to the group,” managing director and CEO Brandon Tay Hoe Lian said in a statement.
“At the same time, our cocoa ingredient operations in Asia and the Ivory Coast are running smoothly and seeing some improvement in grinding margins. Nonetheless, we will continue to monitor the rising cocoa bean prices and prudently manage our raw material and finance costs to ensure we can maintain our profitability.”
In the first nine months to Sept 30, GCB posted a net profit of RM857mil on revenue of RM3.5bil.
The group declared a first interim single-tier dividend of 2.0 sen per share in respect of the financial year ending Dec 31, 2023, with the payment ex-date on Dec 27 and payment date on Jan 19, 2024.
The dividend represents a dividend payout of RM23.5mil or 27.4% of the group’s 9M23 net profit.
