Guan Chong Bhd is cautiously optimistic of the company’s near-term prospects, with the year 2022 believed to be an international year of recovery, spurred by pandemic recovery and growing international travels.
Despite the optimism, Guan Chong will continue to face challenges from the ongoing pandemic exacerbated by the ongoing Russia-Ukraine conflict, creating a knock-on effect on consumer demand, business confidence and the global supply chain.
Chairman Tan Ah Lai said, “Despite the sluggish global economy and logistical challenges, customers’ demand for cocoa-derived ingredients remained strong in 2021, resulting in a good increase in our production capacity and turnover compared to 2020. However, due to the fall in cocoa butter prices, we have recorded lower profitability in 2021.” Tan however said that with chocolate consumption already on an upward trend, the resumption of global travel is likely to drive increased chocolate consumption.
To grab the opportunity during the economic recovery, the group had strengthened its position as a prominent global player in the cocoa supply chain through various investment initiatives. One is its Ivory Coast factory which is approaching first phase completion while the planned construction of a new chocolate producing facility in the UK is set to conclude in 2022. Guan Chong has also successfully enhanced the profitability, operational efficiency and improved utilisation of capacity for its German subsidiary SCHOKINAG.
Tan added, “Our recent expansion into Europe, known for its high levels of chocolate consumption has placed us in a prime position to capitalise on the strong demand. At the same time, the commencement of cocoa grinding operations at our facility in Ivory Coast will also see us begin to reap the fruits of our ‘close to source’ and ‘close to market’ expansion policies.” This will help mitigate future supply chain risks, and provide it with greater control over production and logistic operations.
To consolidate its presence in Europe, the group planned to allocate RM50 million (US$11.41 million) in upgrading SCHOKINAG’s existing chocolate production lines and purchase additional machineries to increase production capacity by 10,000 tonnes in 2022, while expanding its presence in both the key markets of UK and Germany.
Guan Chong’s progressive expansion has positioned it as the world’s 4th largest cocoa grinding company, with a total of 277,000 tonnes in annual bean grinding capacity which provides it with both the scale to mitigate against any supply-side shocks and the financial clout to overcome any dips in global demand.