Guan Chong to invest RM50mil in capex for the next two years

Guan Chong to invest RM50mil in capex for the next two years

22 Nov 2021

Guan Chong Bhd plans to invest RM50 million in capital expenditure (capex) in the next two years for its Germany plant Schokinag Holding GmbH.

In a statement today, the company said the capex will mainly fund capacity expansions for the Mannheim-based plant, aiming to ride on the recovery in Europe as borders open up in the continent.

The company said the growing revenue contribution from Schokinag also necessitates the expansion.

Managing director and chief executive officer Brandon Tay Hoe Lian said the company finally made its long-overdued visit to Schokinag in October and is happy to physically meet the team to discuss on operation optimisations and growth strategies.

“The better performance in Schokinag, even without new capacity put in, is not only a good indication of economic recovery in the European region, but also a reflection of our German team in growing our market share in industrial chocolate in Europe.

“Hence, we believe the decision to expand Schokinag’s capacity is necessary to support the team in their growth ambition, and we will continue to evaluate other expansion options where needed to capture the ongoing opportunities,” he said.

Meanwhile, Guan Chong’s net profit eased 26.3 per cent to RM34.46 million in the third quarter (Q3) ended September 30, 2021 from RM46.78 million recorded in the same quarter a year ago.

The company said the lower net profit recorded for Q3 was mainly due to the higher freight costs and competitive margins that were committed last year.

Revenue in the same quarter increased 18.6 per cent to RM998.1 million from RM841.59 million, backed by Schokinag’s contributions and better overall sales tonnage.

For the nine month period, Guan Chong’s net profit eased 40.5 per cent to RM104.74 million from RM175.92 million, while revenue grew 6.5 per cent to RM2.83 billion from RM2.66 billion.

Moving forward, Tay said the company is seeing signs of demand for cocoa products and ingredients recovering in tandem with economies reopening and higher vaccination rates worldwide.

“The commencement of the Ivory Coast factory mid-2022 will also be timely to capture the growing demand trend,” he added.

Source: NST