PPB GROUP BERHAD
PRE-TAX PROFIT UP 3% TO RM1.21 BILLION
FOR YEAR 2016
FINANCIAL HIGHLIGHTS FOR YEAR 2016
- PPB Group revenue rose 3% to RM4.19 billion in FY2016 mainly attributed to higher revenue generated from Grains and Agribusiness; Consumer Products; and Film Exhibition and Distribution despite lower revenue delivered by the Environmental Engineering and Utilities; and Property segments
- Group pre-tax profit of RM1.21 billion was 3% higher than FY2015 mainly due to higher profit contributed by the Grains and Agribusiness segment and better results from the Group's China associates.
- Profit for the year was RM1.11 billion which translated to earnings per share of 88.15 sen for 31 December 2016.
A final single tier dividend of 17 sen per share for financial year ended 31 December 2016 will be tabled for approval by PPB shareholders at the Annual General Meeting to be held on 9 May 2017. The final dividend is payable on 25 May 2017 to shareholders whose names appear in the Record of Depositors on 15 May 2017.
Together with the interim single tier dividend of 8 sen per share, the total dividend paid and payable for FY2016 would be 25 sen per share (FY2015 : 25 sen per share).
REVIEW OF OPERATIONS
The results of PPB’s business operations for 2016 are summarised as follows :-
- Revenue from the Grains and Agribusiness segment was up 6% to RM2.86 billion mainly due to flour sales volume increase in Vietnam with a full year contribution from the flour mill in northern Vietnam, coupled with the increase in both selling prices and sales volume in Indonesia, despite lower revenue from flour mills in Malaysia. Segment profit increased marginally by 3% to RM267 million in FY2016 primarily attributable to the better performance from the Indonesia and Vietnam flour mills, which offset in part the lower profits from the flour mills in Malaysia and lower net foreign exchange translation gain.
- Consumer Products segment's revenue grew 6% to RM626 million mainly due to the distribution of new agency products, improved sales of existing in-house products as well as higher sales volume and selling prices of bakery products. Higher staff cost and sales of lower margin products resulted in lower segment profits of RM22 million for FY2016.
- Revenue from Film Exhibition and Distribution segment grew by 8% to RM468 million in FY2016 mainly due to contribution from new cinemas opened in 2015, improved collection from strong local, blockbuster and Chinese New Year movie releases and higher concession sales. Despite higher revenue recorded for FY2016, lower contribution from film distribution and a foreign exchange translation loss on USD-denominated loans resulted in lower segment profit of RM59 million for FY2016.
- The Environmental Engineering and Utilities segment registered a lower revenue of RM186 million for FY2016, down 27% compared with FY2015 mainly due to progressive completion of engineering projects and fewer projects secured in 2016. Besides, the newly-secured projects are at their initial stages and have yet to contribute. Segment profit decreased 42% to RM6.1 million in tandem with the lower revenue.
- Revenue from the Property segment decreased by 15% due to lower progress billings recognised in FY2016 on delivery of vacant possession of properties sold in Taman Tanah Aman, Seberang Prai and the reduced rental income from lower occupancy rates. Segment profit reduced in line with the lower revenue to RM18.0 million.
- Combined revenue from Investments and Other Operations was broadly similar at RM141 million for FY2016. The Chemicals Trading and Manufacturing business contributed higher revenue to the combined segment riding on higher sales which was partly offset by lower dividend income received and lesser sales in the packaging division. The combined segment profit was lower by 41% to RM7.0 million due to lower dividend income received, losses in the packaging division as well as the one-off gain on liquidation of subsidiary in FY2015. Chemicals Trading and Manufacturing division however contributed higher profits from increased revenue and better margins.
PROSPECTS FOR 2017
The operating environment in 2017 is expected to be challenging for the Group's core businesses. Intense competition will continue in the flour markets in Malaysia, Indonesia and Vietnam, while the feed market in Malaysia will be uncertain with the rapidly evolving industry landscape. However, the Group is confident of maintaining its strong position in the Grains and Agribusiness segment with its industry knowledge and experience. While the weaker Ringgit and economic uncertainty are expected to weigh on consumer confidence and affect spending, the Group expects the performance of the Consumer Products segment to continue to be satisfactory. The Film Exhibition and Distribution segment will be supported by the opening of three new cinemas and strong line-up of movies in 2017. The Environmental Engineering and Utilities segment is well-positioned to participate in Government projects to upgrade and renew the water and sewage infrastructure. The Property segment is planning to launch a new development project in a strategic location, and will continue to focus on improving the yield of its investment properties.
While the Group's main business segments are expected to perform satisfactorily, Wilmar's performance will continue to contribute substantially to the Group's overall financial results for 2017.
3 March 2017