Wilmar’s ‘short-term’ one-off loss, PPB confident of future

Lim: ‘We remain confident about the long-term prospects for Wilmar.’ With him is non-independent, non-executive director Datuk Ong Hung Hock (left).

KUALA LUMPUR: Conglomerate PPB Group Bhd believes the loss suffered by its associate Wilmar International Ltd was merely a short-term setback for the Singapore-listed firm.

Its managing director Lim Soon Huat told a media briefing that they viewed the group’s 18.55% stake in the agribusiness trader as a long-term investment.

“We believe it is a one-off, short-term setback for Wilmar’s operations.

“We remain confident about the long-term prospects for Wilmar,” he said after the group’s briefing for its first half results yesterday.

PPB posted a net loss of RM78.7mil in its second quarter ended June 30, on the back of RM1.06bil in revenue, weighed down by the losses incurred by Wilmar.

Singapore-listed Wilmar, which is the world’s largest agribusiness trader, had reported a net loss in its second quarter, largely due to its oilseeds and grains segment.

This contributed a net loss of RM170mil to the group during the quarter, compared to a RM135mil profit a year ago.

For the first half, the group’s share of Wilmar’s profit was significantly lower at RM11mil, from RM294mil during the same period last year.

Wilmar has contributed between 60% to 70% of PPB Group’s profits over the years.

Moving forward, Lim said they expected the group’s core businesses to continue to perform well during the second half, particularly the grains and agribusiness, and film exhibition and distribution segments.

These two segments, he said, were expected to contribute significantly to the group’s full year earnings.

“The grains and agribusiness will be supported by the growing consumption in countries like Indonesia and Vietnam.

“We continue to build our distribution channels and logistics capabilities in these countries, and our flour mill investments in China have also started to be profitable, since early this year,” he told reporters.

On the film exhibition and distribution segment, Golden Screen Cinemas (GSC) Sdn Bhd chief executive Koh Mei Lee said there were eight cinema projects in the pipeline, with 89 new screens to be opened between 2017 and 2019.

This year, the group added four screens at GSC Mid Valley, bringing the group’s total to 306 screens in 33 locations.

Koh added that the group had bumped up its capital commitment by RM107mil to RM490mil.

It had earlier announced a capital commitment of RM383mil for the expansion of its various core operations. Since then, Koh said the group had spent RM50mil, and the balance would be used over the duration of the projects, spanning two or three years.

A large portion of this, or RM187mil, will be spent in the film exhibition and distribution segment for the opening of new cinemas, investment into Cambodia and the upgrading of existing cinema equipment among others.

The group is also spending RM175mil in its grains and agribusiness segment, for its investments in its China flour mills, a flour mill in Pasir Gudang and the construction of another mill in Vietnam.