CEO and managing director Brandon Tay Hoe Lian
KUALA LUMPUR: Guan Chong Bhd
posted a record-breaking net profit of RM92mil in the first quarter ended March 31 (1Q24), more than tripled from RM23.8mil in the previous corresponding quarter.
The fourth-largest cocoa grinder attributed the higher profit due to better grinding margins, driven by high demand for cocoa ingredients surpassing bean supply in the current global shortage.
Its revenue during the quarter jumped 69.6% to RM1.87bil compared with RM1.1bil previously, driven by increased selling prices and higher sales volumes of cocoa ingredients, particularly cocoa butter and cocoa powder.
“This 1Q24 net profit is the highest that we have ever recorded in our corporate history. At this rate, it points to a year of outperformance for the group in 2024,” CEO and managing director Brandon Tay Hoe Lian said in a statement.
He noted that global consumption of chocolate remained robust, bolstered by increasing tourism and festive activities.
“We expect this momentum to continue as our operations in Malaysia, Indonesia, and the Ivory Coast are running at full capacity to meet our clients’ demands.
“Nonetheless, the escalating prices and supply shortage of cocoa beans remain a concern. For all that, we are carefully managing our working capital needs during this challenging situation, while continuously engaging with our supporting banks for sufficient banking facilities to maintain business operations. Additionally, we maintain close and consistent communication with our suppliers to ensure a steady bean supply,” he added.
Guan Chong also plans to invest over RM50mil in capital expenditure to meet the growing demand for cocoa ingredients.
“We have experienced a significant increase in orders for our cocoa ingredients, prompting us to seize the opportunity to expand our production capacity at our existing grinding facilities in Malaysia, Indonesia, and Ivory Coast, as well as value-added capacities in the United Kingdom and the United States.
“We intend to increase our annual cocoa ingredient capacity to 360,000 tonne by the end of 2024, from 330,000 tonne as at Dec 31, 2023,” Tay said.
“Moving ahead, we will continue to maintain a cautious approach amidst this unprecedented period of record-high cocoa bean prices. Our focus remains on sustaining business operations while actively reducing our financial gearing levels to lower finance costs.”
