Asia's growing cocoa appetite lifts Guan Chong's 2Q net profit up 42%

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KUALA LUMPUR (Aug 19): Cocoa grinder Guan Chong Bhd’s net profit rose 42% year-on-year to RM60.1 million or 12.77 sen per share in its second quarter ended June 30, 2019 (2QFY19), thanks to higher sales volume of cocoa products, which pushed revenue up 53% to RM753.06 million.

In contrast, the group posted a net profit of RM43.03 million or 9.01 sen per share in the same period last year, when revenue was RM491.58 million.

The group declared a second interim dividend of 1.5 sen per share in respect of its FY19, payable on Sept 27, its stock exchange filing today showed.

The stronger 2QFY19 profit pushed its cumulative net profit for the first six months of FY19 up 39% y-o-y to RM114.14 million or 23.89 sen per share, from RM82.36 million or 17.24 sen per share. Revenue climbed at the same rate to RM1.4 billion, from RM1.01 billion.

Going forward, the group said it expects business environment for FY19 to be less volatile and expects its overall performance to remain positive, as strong growth of global demand for chocolate is projected.

Separately in a statement, Guan Chong's managing director and chief executive officer Brandon Tay said the group is "benefitting from encouraging growth in global demand for cocoa ingredients, especially in Asia, due to rising consumer affluence and appreciation of chocolate and related products".

Meanwhile, the group's crop yield and production continues to be supported by favourable weather conditions, which is benefitting the industry as a whole, Tay said. “In this regard, we look forward to deliver continued strong performance for the second half of 2019,” he added.

With its recently-expanded capacity in early 2019, Tay said Guan Chong is well poised to capture more sales from the global food and beverage industry.

Guan Chong currently has a combined grinding capacity of 250,000 tonnes per annum, of which 130,000 tonnes comes from its two factories in Pasir Gudang, Johor, while 120,000 tonnes come from its plant in Batam, Indonesia.

Guan Chong plans to continue focusing its efforts on exploring new markets for its wide range of cocoa ingredients, optimise production according to market conditions, and expand overall grinding capacity.

The group's shares closed 12 sen or 3.52% higher at RM3.53 today, valuing the company at RM1.68 billion. Over the past year, the counter has surged some 56%, from when it was trading at RM2.27.