KUALA LUMPUR (Aug 24): Guan Chong Bhd (KL:GCB) reported a fivefold jump in second quarter earnings to a new record thanks to a sharp decline in costs that outpaced the fall in selling prices of cocoa products.

Net profit for the three months ended June 30, 2026 (2QFY2026) was RM253.02 million compared to RM48.2 million in the same quarter a year earlier, the cocoa grinder said in an exchange filing. Lower borrowings also cut finance costs even as revenue plunged 54% year-on-year to RM1.8 billion.

However, Middle East uncertainties could weigh on demand and broader consumer sentiment, while the onset of a very strong El Niño poses renewed supply risk in the coming months, the company warned.

Cocoa futures have recovered from their lows during the Iran war amid concerns over deteriorating weather conditions in the key producing region of West Africa that accounts for about 70% of the world’s supply.

Rising bean prices threaten grinders like Guan Chong as well as chocolate manufacturers that may be forced to raise retail prices.

Still, Guan Chong is optimistic that chocolate demand is expected to recover gradually through the second half of 2026, saying that easing cocoa inflation and moderating prices make products more accessible and encourage consumers to resume or increase purchases.

In the first six months, net profit at Guan Chong has more than doubled to RM376.6 million from a year earlier while revenue fell 46% year-on-year to RM4.42 billion.

Loans and borrowings stood at RM2.5 billion as at June 30, down 22% from RM3.19 billion at end-2025.

The company also declared a dividend per share of 2.5 sen payable on Sept 30, bringing total dividends announced to-date to 5.50 sen. The company did not declare any dividend for the first half of 2025.

Shares of Guan Chong rose 3% to RM1.28 ahead of the results announcement on Monday, giving it a market capitalisation of RM3.5 billion.