Thanks to continued strength core premium brands and deep retail relationships, Indonesia, the key market, posted the strongest growth with 20.5% followed by Malaysia and the Philippines.
On the other hand, Delfi saw a decline in its agency brands segment after the "strategic" termination of a major account.
Excluding this impact from 3QFY2025, the agency brands segment would have grown 30.4% y-o-y.
In the quarter, Delfi's gross profit margin declined by 140bps y-o-y from 28% in 1QFY2025 to 26.6% in 1QFY2026, mainly due to a weaker rupiah and the absorption of higher cocoa costs from forward contracts.
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As a result, Delfi's 1QFY2026 ebitda eased slightly to US$16.8 million, down 0.8% y-o-y, reflecting lower gross profit and marginally higher operating costs. Despite so, Delfi continues to maintain a strong balance sheet, with a net cash position of US$77 million.
Chee believes that in contrast to a major competitor, Delfi seems to have prioritised volume and market share growth by maintaining stable pricing, which led to margin compression.
"We view this as a potential near term positive, as increased market share could position Delfi to deliver a meaningful earnings uplift when lower cocoa prices start to flow through in the upcoming quarters," he reasons.
Chee further notes that Delfi remains on track to deliver his flattish y-o-y FY2026 earnings forecast.
"While lower cocoa costs could provide some uplift in the coming quarters, this could be largely offset by significant depreciation of the rupiah by more than 7% y-o-y as of mid-May, with no clear signs of stabilisation."
"Accordingly, we prefer to remain on the sidelines and await clearer signs of an earnings turnaround before turning positive," says Chee.
Delfi shares, as at 10.30 am, was up 1.04% to trade at 97 cents.
