PPB Group delivered higher pre-tax profit of RM496 million for 1H2017
FINANCIAL HIGHLIGHTS FOR 1H2017
- PPB Group revenue declined by 4% to RM2.09 billion in 1H2017. The higher revenue from Consumer Products segment was offset by lower revenue in other segments.
- Group pre-tax profit of RM496 million was 95% higher compared with RM255 million for 1H2016, mainly due to significantly higher profit contribution by its 18.5% associate, Wilmar International Limited (Wilmar) which recorded a net profit of USD422 million compared with USD19 million in 1H2016.
- Profit for the period was higher at RM459 million compared with RM200 million recorded in 1H2016. Accordingly, 1H2017 earnings per share increased to 37.75 sen compared with 14.13 sen for 1H2016.
PPB has declared an interim single tier dividend of 8 sen per share for the financial year ending 31 December 2017 payable on 28 September 2017 to shareholders whose names appear in the Record of Depositors on 11 September 2017.
REVIEW OF OPERATIONS
The results of PPB’s business operations for 1H2017 are summarised as follows :-
- Grains and Agribusiness segment’s revenue for 1H2017 remained unchanged at RM1.46 billion as higher feed revenue was offset by lower revenue from flour. Segment profit was lower at RM56 million, down 52% from 1H2016, mainly due to higher raw material cost exacerbated by the lower sales volume and selling prices mainly registered by the Indonesian flour mill.
- Consumer Products revenue for 1H2017 was RM348 million, up 11% from 1H2016. Segment profit of RM18 million was largely due to a gain of RM8 million from the sale of land and building and improved results of the bakery division.
- Film Exhibition and Distribution segment’s revenue was lower by 5% to RM248 million as revenue from the Chinese New Year and local movies released in 1H2017 was much lower than 1H2016. Accordingly, segment profit for 1H2017 was lower by 27% to RM36 million.
- The Environmental Engineering and Utilities segment registered lower revenue of RM45 million, down 62% from 1H2016 due to the completion of most of the environmental engineering projects in 2016 and projects secured in 2017 have yet to contribute significantly. In line with that, segment profit decreased by 55% to RM2.6 million.
- The Property segment revenue was lower by 35% at RM21 million due mainly to the completion of the Taman Tanah Aman project in 2016; lower occupancy rate for investment properties as extension and refurbishment works are currently in progress; and lower project management fee income. Segment profit decreased accordingly by 73% to RM4.2 million.
- Revenue for the combined segments of Investments and Other Operations decreased by 6% to RM72 million due to lower contribution from the chemicals trading and manufacturing division. The combined segment profit was significantly lower by 85% at RM2.7 million for 1H2017 due mainly to a one-off gain on disposal of factory land and building of RM7.3 million recorded in 2016, as well as lower sales of higher profit margin products, and higher raw material costs at the chemicals trading and manufacturing division.
Moving forward, PPB Group has a total capital commitment of RM476 million as at 30 June 2017 to be spent as follows :-
Amount to be spent (RM' million)
|Grains and agribusiness||
|Film Exhibition and distribution||
|Environmental engineering and utilities||
PROSPECTS FOR 2017
On the back of the volatile world prices for wheat, the outlook for the flour business is expected to be challenging. However, we are confident that stronger flour demand in the second half of the year would mitigate the margin erosion pressure. Amidst a competitive and changing industry landscape, the animal feed business is difficult although the division is expected to maintain its performance given a bullish broiler market. In summary, the Grains and Agribusiness segment performance will be affected by the aforesaid factors. The Consumer Products segment is expected to perform satisfactorily with strategic promotional activities and campaigns. The performance of the Film Exhibition and Distribution segment will be supported by the opening of new cinemas in Malaysia and Vietnam; and the line-up of blockbuster movies for the rest of the year. The Environmental Engineering and Utilities segment continues to focus on timely completion of on-going projects and securing new projects to augment its order book. The Property segment will focus on launching a mixed development project in Taman Megah, Petaling Jaya in 4Q2017.
The Group’s main business segments are expected to perform satisfactorily for the current financial year. However, the overall financial results of PPB Group would depend substantially on the business performance of Wilmar.
29 August 2017