KUALA LUMPUR, MARC Ratings has revised the outlook on JB Cocoa Sdn Bhd’s RM500 million Sukuk Wakalah to stable from negative, while affirming its rating at A+IS.
The cocoa processor, a wholly owned subsidiary of Singapore-listed JB Foods Ltd, benefits from a corporate guarantee by its parent. MARC’s rating is anchored on JB Foods’ consolidated credit profile, reflecting the group’s close operational and financial integration.
The improved outlook reflects JB Foods’ efforts to manage leverage amid elevated cocoa prices, which averaged around US$7,900 per tonne between 2024 and early 2025. Its debt-to-equity ratio eased to 0.99 times as of March 31, 2025, aided by stricter working capital management and reinforced by an RM85.9 million rights issue completed in May.
MARC noted that prospects of improved cocoa production in Ivory Coast and Ghana could further ease working capital needs and leverage, though levels remain high.
Despite cocoa prices averaging US$7,300 per tonne in July 2025, still far above the 10-year average of US$2,600, expectations of higher supply from the world’s top producers should help stabilise the market. JB Foods has also diversified sourcing to reduce reliance on these two countries.
Its Malaysian and Indonesian grinding plants, with a combined capacity of 210,000 tonnes per year, were operating at around 79% and 77% utilisation, respectively, as of end-March 2025. A planned facility in Ivory Coast will add 30,000 tonnes by FY26, though expansion will be paced with demand.
For FY25, operating cash flow swung to a positive RM629.9 million from a negative RM200 million in 2023, supported by tighter working capital discipline and stable processing margins. Borrowings declined to RM873.1 million from RM1.2 billion, with liquidity bolstered by RM180 million in unutilised sukuk credit lines and RM930.3 million in additional available facilities.
MARC added that while shorter lead times could pose operational challenges, the shift towards smaller, more frequent customer orders should reduce inventory needs and reliance on debt.
