Guan Chong posts RM5.28m 1Q net profit

by **Cals** Wed 21 May 2014, 01:48

Business & Markets 2014

Written by Charlotte Chong of theedgemalaysia.com

Tuesday, 20 May 2014 10:55

KUALA LUMPUR: Guan Chong Bhd, one of Asia’s largest cocoa processors, posted a net profit of RM5.28 million in its first quarter ended March 31, turning around from two consecutive quarters of losses. This was helped by better sales volume and selling price of cocoa butter.

However, the net profit was 68% lower than the RM16.54 million in the same quarter a year ago despite revenue improving by 31.66% to RM479.62 million.

Its earnings per share deteriorated to 1.11 sen from 3.47 sen.

In a filing with Bursa Malaysia yesterday, Guan Chong attributed the drop in profit to lower gross profit margin, which it said resulted from a decrease in the selling price of cocoa cake and powder. This, it added, accompanied an increase in cocoa bean price and a writedown of inventories.

The group registered higher finance costs and net losses on foreign exchange in the quarter due to the weaker ringgit against the US dollar and British pound.

Its turnover, however, improved due to increased sales volume and selling price of cocoa butter.

Guan Chong expects the business environment for the cocoa grinding industry to stage a steady recovery in the full financial year ending Dec 31, 2014 in tandem with a recovery in developed economies.

In a statement yesterday, managing director and chief executive officer Brandon Tay Hoe Lian (pic) said the group aims to continue marketing its cocoa ingredients, develop new markets for its new business in industrial chocolate, and ensure that production costs are contained.

“Backed by our advanced cocoa processing facilities in Johor and Batam, we are well-positioned to not only meet the next growth trend but also to expand our geographic footprint,” he said.

Guan Chong posted a net loss of RM8.49 million and RM11.85 million in its fourth quarter ended Dec 31 and third quarter ended Sept 30, 2013 respectively.

Those losses were blamed on the higher net loss on foreign exchange and higher net fair value loss on commodity future contracts.

This article first appeared in The Edge Financial Daily, on May 20, 2014.