Tuesday 19 Mar 2024
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KUALA LUMPUR (Aug 16): Guan Chong Bhd (GCB)’s net profit for the second quarter ended June 30, 2022 (2QFY22) rose 22.59% to RM44.61 million from RM36.39 million in the same period a year ago, in line with improving grinding margins, apart from being boosted by higher sales tonnage of cocoa ingredients, following a recovery in global chocolate consumption in post-pandemic era.

Earnings per share increased to 4.22 sen from 3.51 sen previously, a bourse filing showed on Tuesday (Aug 16).

Revenue grew 36.67% to RM1.2 billion — its best ever quarterly revenue — from RM876.23 million in the same period last year, mainly due to an increase in sales volume of cocoa butter, as the previously delayed shipments are being shipped out in this quarter. Additionally, improved selling price for cocoa solids also contributed to higher revenue for the quarter.

The group declared a second interim single-tier dividend of two sen per ordinary share in respect of the financial year ending Dec 31, 2022, payable on Oct 11, 2022.

On a quarterly basis, GCB saw its net profit fall by 16.25% from RM53.27 million posted in the previous immediate quarter, despite a 20.89% surge in revenue from RM990.53 million in 1QFY22.

For the cumulative first six months, GCB’s net profit climbed 39.26% to RM97.88 million from RM70.28 million, while revenue was up 19.15% to RM2.19 billion from RM1.84 billion.

Looking ahead, high energy costs have hit the global economy, especially in certain Western countries, apart from high inflation and high interest rates. These factors may hurt the economy, as well as overall chocolate demand, the company said, adding that the latest signs of recession may be more bearish for chocolate demand. The group however considers chocolate to be a recession-proof affordable consumer product.

Even so, GCB is adopting a cautious outlook and is more cautious over its investments and future plans. It plans to focus on expanding the market of high margin industrial chocolate and the optimization of production according to market conditions.

“The results reflect not only the recovering market but also our continuous effort to strengthen our operations with efficiency, and meet the needs of our markets in Asia, Europe and the United States.

“In the meantime, we will remain guarded on the industry outlook, in light of the ongoing inflationary pressures faced globally and higher energy prices in Europe,” said GCB managing director and chief executive officer Brandon Tay Hoe Lian in a separate statement.

He noted the GCB’s Ivory Coast subsidiary in Africa is progressing well and nearing completion, and that its new facility is expected to increase the group’s annual capacity by 22% or 60,000 metric tonnes (MT) to 337,000 MT.

“Even so, our financial upside continues to be positive, as our new grinding facility in Ivory Coast will commence operations soon. The new plant will not only reinforce our position in the industry with a larger grinding capacity, but also help attain sustainable growth to our future earnings,” added Tay.

At noon break on Tuesday, GCB’s share was down one sen or 0.41% to RM2.40, valuing the cocoa grinder at RM2.58 billion.

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