Cocoa ingredients seller JB Foods has reported a revenue of US$595.8 million, up 16.9% over the preceding year. However, no thanks to hedging losses, earnings dropped 88.6% y-o-y to US$1.9 million.
In FY2023, the company sold more cocoa ingredients at a higher price. However, the "volatile" cocoa market caused US$12.3 million in fair value mark-to-market losses. The company had to bear higher financing costs as well.
The shortage of the cocoa bean supply has contributed to a sharp spike in cocoa bean prices to an unprecedented historical high in February 2024, observers CEO Tey How Keong.
"In the short-term, this may create a potential global cocoa bean supply crunch until crop production improves. We will manage and monitor closely the execution of the cocoa bean deliveries by our suppliers in a timely manner," he adds.
This current FY2024, Tey sees greater volatility in cocoa bean prices, no thanks to unfavourable weather in the key producing regions of West Africa.
Coupled with the high interest rate environment and uncertainty in the global economic environment, the company warns it may see potential headwinds, with the shortage of beans driving up prices and thereby hurting its processing margins.
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The group will continue to closely monitor the developments in the industry and will respond accordingly in its pricing and growth strategy.
JB Foods shares last traded at 52 cents, up 4% over the past 12 months.
