Guan Chong posts higher net profit in 1Q22

GUAN Chong Bhd saw its net profit rise 57.2% to RM53.3 million in the first quarter ended March 31, 2022 (1Q22), from RM33.9 million in the previous corresponding quarter.

The world’s fourth largest cocoa grinder said this is attributable to the enhanced grinding margin in the quarter.  

It said the better grinding margin reflected not only the recovery of key chocolate consuming markets in Europe and the US during the quarter, in contrast to the negative sentiments prior due to the Covid-19 pandemic, but it also reflected a lower production cost per metric tonne (MT) as a result of the increased production volume in 1Q22.

At top line level, both the group’s grinding operations in Malaysia and Indonesia, as well as the industrial chocolate subsidiary in Germany recorded improved revenues of RM990.5 million in 1Q22, 3.2% higher than RM960.1 million last year.

“With international borders reopening for travel and the pandemic behind us, we expect the demand for cocoa ingredients to grow in tandem with the improved chocolate consumption in the developed markets of the US and Europe,” the group MD and CEO Brandon Tay said in a statement yesterday.

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

Meanwhile, the first phase of the construction works for Guan Chong’s new cocoa grinding facility in Ivory Coast, Africa, is slated for completion by 3Q22. 

Upon commissioning, the facility is expected to add on 60,000MT of annual grinding capacity to the group, expanding overall annual grinding capacity to 330,000MT.

Commenting on the overseas operations, Tay further added: “We stay true to the vision of becoming a key global player in the cocoa supply chain. With that vision, we will continue our expansion plans in the UK and upgrade plans for our facilities in Germany and the US.”

The company remains cautious and circumspect of the recent inflationary pressure, interest rate spike and rising energy cost as a result of the Ukraine-Russia conflict. 

Guan Chong declared the first interim dividend of 1.5 sen per share in respect of the financial year ending Dec 31, 2022, with ex-date on June 17, 2022, and payment date on July 12, 2022. The payout will amount to a dividend payout of RM15.9 million or 29.8% of the net profit for 1Q22. — TMR