JOHOR BHARU: The world’s fourth-largest cocoa grinder Guan Chong Berhad recorded a 10.1% increase in net profit to RM33.9 million in the third quarter ended Sept 30, 2023 (3Q23), from RM30.8 million previously, driven by improved operating profit from its industrial chocolate segment in Germany.
In 3Q23, operating profit from the Group's industrial chocolate segment rose to RM28.7 million, which was a significant improvement from a small loss previously. The increased profitability was mainly attributed to higher average selling prices of industrial chocolates, and stabilisation of energy prices at lower levels following the Russia-Ukraine tensions last year. Additionally, the revenue from this segment rose 30.0% to RM351.7 million, from RM270.6 million previously, in line with the higher average selling prices.
Meanwhile, the Group’s revenue in 3Q23 grew 16.8% to RM1.3 billion, from RM1.1 billion previously, as a result of higher average selling prices of cocoa butter and cocoa solids in tandem with the rising cocoa bean prices. The higher revenue also helped offset the increased finance cost due to higher interest rates.
Managing director and CEO Brandon Tay Hoe Lian said: “Our strategic venture into the industrial chocolate business, investing in the century-old SCHOKINAG-Schokolade-Industrie, is showing fruition, and contributing meaningfully to the Group’s earnings. Currently, our new industrial chocolate facility in the United Kingdom (UK) is undergoing trial operations. Once fully running, we will see additional earnings contributions from the UK to the Group.”
“At the same time, he added their cocoa ingredient operations in Asia and the Ivory Coast are running smoothly and seeing some improvement in grinding margins.
Nonetheless, he said they will continue to monitor the rising cocoa bean prices and prudently manage their raw material and finance costs to ensure they can maintain their profitability.
For the nine months ended Sept 30, 2023 (9M23), the Group’s revenue increased 7.9% to RM3.5 billion as compared to RM3.3 billion in the same period last year in line with the higher cocoa bean prices, while net profit decreased 33.3% to RM85.8 million from RM128.6 million previously due to lower grinding margins and higher finance cost.
The Group declared a first interim single-tier dividend of 2.0 sen per share in respect of the financial year ending Dec 31, 2023, with the payment ex-date on Dec 27, 2023 and payment date on Jan 19, 2024. The dividend represents a dividend payout of RM23.5 million or 27.4% of the Group’s 9M23 net profit.