PPB GROUP REGISTERED LOWER PRE-TAX PROFIT OF RM255 MILLION COMPARED WITH 1H2015
FINANCIAL HIGHLIGHTS FOR 1H2016
- PPB Group revenue grew by 11% to RM2.18 billion in 1H2016. The increase was mainly due to higher revenue contributed by the Grains and agribusiness; Film exhibition and distribution; and Consumer products segments.
- Group pre-tax profit of RM255 million was 45% lower compared with RM465 million for 1H2015, mainly due to substantially lower profit contribution by its 18.6% associate, Wilmar International Limited (Wilmar).
- Profit for the period was RM200 million in 1H2016 compared with RM418 million recorded in 1H2015. Accordingly, 1H2016 earnings per share decreased to 14.13 sen compared with 35.05 sen for 1H2015.
PPB has declared an interim single tier dividend of 8 sen per share for the financial year ending 31 December 2016 payable on 28 September 2016 to shareholders whose names appear in the Record of Depositors on 9 September 2016.
REVIEW OF OPERATIONS
The results of PPB’s business operations for 1H2016 are summarised as follows :-
- Grains and agribusiness segment delivered improved revenue of RM1.46 billion compared with RM1.29 billion in 1H2015 mainly from higher flour sales volume in Vietnam as well as higher selling prices and sales volume in Indonesia. Segment profit was up 17% to RM117 million compared with 1H2015, contributed mainly by the Group's Indonesian flour mill which turned around to register a profit from higher sales volume and improved selling prices. The segment also benefited from better margins arising from favourable wheat prices.
- Consumer products revenue for 1H2016 was RM314 million, up 4% from 1H2015 due mainly to new agency products distribution and higher sales of existing agency products. Segment profit was down 36% at RM7.6 million compared with 1H2015 due to higher staff and distribution costs.
- Film exhibition and distribution segment’s revenue grew 17% to RM262 million compared with 1H2015. The improved revenue was mainly due to improved cinema collections from the opening of new cinemas in 2015; higher number of strong local and blockbuster movies released, concession sales and sales advertising income. In line with the revenue growth, segment profit was up 36% to RM50 million.
- The Environmental engineering and utilities segment registered marginally lower revenue of RM117 million compared with RM121 million in the 1H2015 as most of the projects are at their completion stages. Segment profit improved by 24% to RM6 million due to higher gross margins achieved from the engineering projects.
- The Property segment revenue was up 6% to RM32 million compared with 1H2015 due mainly to higher progress billings for the bungalows in Taman Tanah Aman in Penang. The improved revenue was partly offset by reduced rental income from lower occupancy rate at New World Park, Penang. The segment profit improved significantly by 76% to RM23 million compared with 1H2015 due to a gain on disposal of factory land and building as well as higher progress billings.
- The marginally lower revenue of RM76 million for the combined segments of Investments and Other Operations was mainly from the drop in packaging revenue which was partly offset by higher chemicals manufacturing revenue. The combined segments collectively registered a higher profit of RM10 million, up 74% mainly from improved chemicals manufacturing profits.
Moving forward, PPB Group has a total capital commitment of RM440 million as at 30 June 2016 to be spent as follows :-
Amount to be spent (RM' million)
|Grains and agribusiness||
|Film Exhibition and distribution||
|Environmental engineering and utilities||
PROSPECTS FOR 2016
With the current wheat price environment, competition in both the domestic and overseas flour markets is anticipated to be more intense. However, with established marketing channels and continuous adjustments to product mix, the Grains and agribusiness segment is expected to maintain its performance for the year. Despite cautious consumer spending, the new agency products should contribute to the Consumer products segment's revenue. The Film exhibition and distribution business will benefit from the improved admissions from its newly-opened cinemas and the strong line-up of movie releases this year. The Environmental engineering and utilities segment will achieve lower revenue reflecting the current contracts in hand, and the Property segment is affected by slower property sales due to weak market sentiment.
Overall, the main business segments of the Group are expected to perform well in 2016. Notwithstanding the loss recorded by Wilmar in the second quarter 2016, Wilmar expects its performance for the rest of the year to be satisfactory barring unforeseen circumstances. The Group's consolidated financial results would be contingent upon Wilmar's business performance given the significant contribution by Wilmar to the Group.
30 August 2016