Guan Chong’s 3Q earnings down 11% on forex losses, revenue up 10%

KUALA LUMPUR (Nov 22): Guan Chong Bhd's (GCB) net profit fell 11% to RM30.76 million or 2.89 sen per share for the third quarter ended Sept 30, 2022 (3QFY2022), from RM34.45 million or 3.32 sen per share for the same period last year, mainly due to mark-to-market loss following the strengthening of the US dollar.

The cocoa grinder said the stronger greenback resulted in an unrealised foreign exchange loss of RM17.1 million after the group’s borrowings in US dollars were marked to the market.

During the quarter under review, the US dollar appreciated from 4.408 on June 30 to 4.634 on Sept 30, it added.

Quarterly revenue increased 10% from RM998.10 million to RM1.1 billion due to higher average selling prices of cocoa power and increased sales tonnage of 5.2% year-on-year.

GCB said higher energy cost at the group’s industrial chocolate plant in Germany, SCHOKINAG-Schokolade-Industrie GmbH, also affected the group’s overall profitability as a result of Ukraine-Russia tensions.

GCB managing director and chief executive officer Brandon Tay Hoe Lian said in a press statement on Tuesday (Nov 22): “Our operations face rapidly changing market dynamics, such as increasing interest rates and rising energy cost in Europe.”

Tay added that GCB aims to secure more forward sales for its anticipated Ivory Coast facility and other plants in Malaysia and Indonesia.

Net profit for the nine months ended Sept 30, 2022 (9MFY2022) increased to RM128.64 million from RM104.74 million for the same period last year, while revenue increased to RM3.29 billion from RM2.83 billion.

Singapore contributed the highest revenue at RM3.2 billion for 9MFY2022, followed by Malaysia (RM2.5 billion) and Indonesia (RM1.2 billion).

The group anticipated further decline in energy cost in 4QFY2022 in Western countries, especially in Germany, while global freight rates are expected to go down and be close to normalising.

At noon, GCB's share price had fallen four sen or 1.80% to RM2.18, giving it a market capitalisation of RM2.56 billion.