Higher sales, better margins lift Guan Chong’s 1Q net profit by 35%

This article first appeared in The Edge Financial Daily, on May 29, 2019.
Higher sales, better margins lift Guan Chong’s 1Q net profit by 35%
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KUALA LUMPUR: Cocoa grinder Guan Chong Bhd, which is aiming to double its grinding capacity over the next five years, said its net profit surge 35% year-on-year to RM53.14 million for the first quarter ended March 31, 2019 (1QFY19) from RM39.33 million previously on improved margins.

Earnings per share improved to 11.12 sen, compared with 8.23 sen for 1QFY18. Quarterly revenue grew 24.7% to RM648.07 million from RM519.69 million a year ago on higher sales volume of cocoa products, according to its exchange filing yesterday.

Guan Chong declared an interim dividend of 1.5 sen per share, payable on July 5.

In a separate statement, Guan Chong managing director Brandon Tay said the group is confident of delivering a strong performance for FY19, supported by the increased cocoa grinding capacity of its manufacturing plants.

He said despite just commissioning an additional 50,000 tonnes in 1QFY19, the group aims to increase its grinding capacity further to meet demand as it continues to see encouraging orders for cocoa ingredients, particularly in Asian markets. The group will also be increasing its efforts to expand its clientele in tandem with its upcoming expansion plans to include the broader food and beverage sector, he said.

“The new capacity is being filled up quickly, with [the] utilisation rate now above 95%. This would not only support our FY19 earnings growth, but also enhance profitability through improved economies of scale.

“To ride the growth in demand for chocolate ingredients, we are looking to double our annual grinding capacity over the next five years from 250,000 tonnes to 500,000 tonnes. This will ensure our consistent and timely fulfilment to our clientele, and allow us to grow our presence not just in traditional markets of Americas and Europe, but also high-growth markets in Asia,” Tay added.