KUALA LUMPUR: Guan Chong Bhd, the world's fourth-largest cocoa grinder, recorded a 10.1 per cent increase in net profit to RM33.9 million in the third quarter ended September 2023 (3Q23) from RM30.8 million previously.
This was driven by improved operating profit from its industrial chocolate segment in Germany, the company said today.
In 3Q23, operating profit from the group's industrial chocolate segment rose to RM28.7 million, 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 per cent to RM351.7 million from RM270.6 million previously, in line with the higher average selling prices.
Group revenue in 3Q23 grew 16.8 per cent 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 chief executive Brandon Tay Hoe Lian said Guan Chong's strategic venture into the industrial chocolate business, investing in the century-old Schokinag-Schokolade-Industrie, is showing fruition, and contributing meaningfully to its earnings.
"Currently, our new industrial chocolate facility in the United Kingdom is undergoing trial operations. Once fully running, we will see additional earnings contributions from the UK to the group," he added.
He said its cocoa ingredient operations in Asia and the Ivory Coast are running smoothly and seeing some improvement in grinding margins.
"Nonetheless, we will continue to monitor the rising cocoa bean prices and prudently manage our raw material and finance costs to ensure we can maintain our profitability."
For the nine months, the group's revenue increased 7.9 per cent to RM3.5 billion as compared to RM3.3 billion in the same period last year in line with the higher cocoa bean prices.
Group net profit decreased 33.3 per cent to RM85.8 million from RM128.6 million previously due to lower grinding margins and higher finance cost.
Guan Chong 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 2and payment date on January 19 2024.
The dividend represents a dividend payout of RM23.5 million or 27.4 per cent of the group's 9M23 net profit.