Guan Chong 1Q net profit jumps 57% on better grinding margins

Guan Chong 1Q net profit jumps 57% on better grinding margins
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KUALA LUMPUR (May 30): Guan Chong Bhd (GCB) posted a 57% increase in its net profit to RM53.27 million for the first quarter ended March 31, 2022 (1QFY22), from RM33.9 million in the previous year’s corresponding quarter, supported by higher grinding margins.

In a filing with the bourse, it said revenue for the quarter grew 3.2% to RM990.53 million from RM960.12 million a year prior.

The group declared a first interim single-tier dividend of 1.5 sen per share, payable on July 12, 2022.

In a statement, GCB attributed the better margin during the quarter to the recovery of key chocolate consuming markets in Europe and the US, as well as the lower production cost per tonne as a result of higher production volume.

GCB managing director Brandon Tay Hoe Lian said the group has been facing multiple headwinds over the last two years, including the Covid-19 pandemic, global supply chain interruptions and uncertainties from the living income differential policy by the two largest bean-producing countries in Africa.

“With international borders reopened for travel and the pandemic behind us, we expect the demand for cocoa ingredients to grow in tandem with the improved chocolate consumption in developed markets of US and Europe.

“Currently, we have even achieved forward sales of more than 50% of our capacity which are slated for delivery in 2023, a marked turnaround from a similar timeframe last year. The sales order book points to a good year ahead,” he said.

Going forward, the group said the first phase of construction works for its new cocoa grinding facility in Ivory Coast, Africa is expected to be completed by the third quarter of 2022, which will add 60,000 tonnes of annual grinding capacity upon commissioning, bringing its total capacity to 330,000 tonnes.

Tay said the group will proceed with its expansion plans in the UK, and plans to upgrade its facilities in Germany and the US.

“Nonetheless, we remain cautious and circumspect of the recent inflationary pressure, interest rate spike and rising energy cost as a result of the Ukraine-Russia conflict.

“These multiple geopolitical and economic factors can create uncertainties to the economy and affect our business performance,” he said.

GCB’s stock ended Monday seven sen or 3.04% lower at RM2.23.

Joyce Goh