JOHOR: The world’s fourth largest cocoa grinder Guan Chong Berhad (GCB) recorded maiden operating profit of RM15.4 million on revenue of RM144.8 million from its Ivory Coast cocoa grinding facility in the first quarter of ended March 31, 2023 (1Q23).
The modern facility aims to be part of GCB’s close-to-source strategy to grind premium-grade cocoa beans and achieve competitive advantage in terms of time- and cost-savings compared to existing Asia-based factories. Moreover, GCB’s direct presence in Ivory Coast enables it to produce cocoa ingredients from single-country origin.
With the new Ivory Coast cocoa grinding facility commissioned in 4Q22, GCB’s total annual grinding capacity has increased by 22% or 60,000 MT to 337,000 MT from 277,000 MT, alongside grinding capacities in Malaysia, Indonesia and Germany.
Managing Director and CEO Brandon Tay Hoe Lian said, “The maiden profit from Ivory Coast is only the beginning. Our establishment in the country is a linchpin to our growth plans of making GCB a truly international player, producing quality ingredients to serve the world’s foremost chocolate market. The ample bean supply in Ivory Coast will not be a hindrance for our capacity expansion should we need to step up even further.”
He added the Group will initially allocate 40% of grinding capacity from the Ivory Coast plant to supply cocoa ingredients to their German industrial chocolate subsidiary, SCHOKINAG-Schokolade-Industrie GmbH (SCHOKINAG), to produce premium quality chocolate ingredients to meet the demand of the European market.”
The setting up of a grinding facility in Ivory Coast will also benefit GCB, in terms of duty-free and quota-free of goods exported to Europe, as well as five years of zero corporate tax.
Meanwhile, GCB reported its financial results of 1Q23, with group revenue increase by 11.3% to RM1.1 billion, from RM990.5 million previously, attributed to improved selling prices for cocoa solid and industrial chocolate ingredients.
However due to lower margin of cocoa butter, and increased finance cost, the Group’s net profit decreased 55.4% to RM23.8 million in 1Q23 from RM53.3 million previously.
Brandon said: “Our forward sales for the financial year ending 31 December 2023 is near-full, indicating the demand for chocolate is still resilient. Our Germany subsidiary is also recording better earnings as energy prices in Europe are now at lower levels, putting less pressure on the operating cost. Besides that, GCB remains prudent in managing our financial cost, while still prioritising our growth plans. Therefore, we have recently issued the second tranche of our sukuk, bringing in additional cash to finance our working capital and capital expenditure.”
Moving forward, he added the Group will remain focus on their core business in cocoa ingredient processing. At the same time, they are determined to optimise SCHOKINAG’s production according to market conditions, while they endeavour to achieve better industrial chocolate sales margin to enhance our bottomline.
