THE improving economic environment and strong commodity prices are expected to help fuel the earnings growth of PPB Group Bhd, which has posted record pre-tax profits for the past two years.
Executive chairman Ong Ie Cheong said that continued growth in the domestic and global economies would have a positive impact on PPB Group's earnings.
“The board is optimistic that the group is well positioned to maintain its good performance,'' Ong told the press at the company's financial result briefing in Kuala Lumpur yesterday.
He said the strong crude palm oil price and higher production at its plantations as a result of more young trees reaching maturity, plus an increasing proportion of mature palms at prime age, would boost the group's earnings.
PPB Group, a flagship company in Robert Kuok's business empire, posted a record pre-tax profit of RM707.4mil for the financial year ended Dec 31, 2003, up 41% on the previous year's RM500.8mil.
Revenue rose 19% to RM9.32bil from RM7.86bil, and earnings per share grew to 75.7 from 49.5 sen in 2002.
Ong attributed the jump in the group's profit last year to strong performance of its sugar and edible oil refining operations and plantation division arising from favourable commodity prices.
The plantation division was the largest contributor to group earnings, generating nearly 30% of its operating profit, followed by sugar refining (27%) and grain, flour and feed production (16%).
In tandem with the impressive earnings growth, PPB Group's share price has risen steadily in the past year, hitting a historical high of RM8.05 on Feb 26. It finished at RM7.75 yesterday.
Ong said last year's strong earnings performance was testimony to the continued underlying strength of the group's major businesses.
“We have made tremendous progress in strengthening the group's core businesses through continual efforts to improve competitiveness by upgrading facilities, reducing operating costs, improving distribution channels, and updating marketing strategies,'' he added.
The group has allocated RM285.8mil for capital expenditure this year to enhance operational efficiency and for the construction of palm oil refineries and a flour mill.
Of the amount, RM185.7mil will go to its plantation arm, PPB Oil Palms Bhd, RM78.9mil to FFM Bhd, and RM12.8mil to PPB Hartabina Sdn Bhd for the renovation of its Cheras Leisure Mall.
Commenting on the privatisation of FFM, Ong said the group had submitted the application to the authorities for approval.
“We expect to complete the privatisation exercise in the third quarter of this year,'' he added.
Apart from a 56% stake in PPB Oil Palms, the group also has a 14% equity interest in Malaysian Bulk Carriers Bhd and 12% in Mesdaq-listed Redtone International Bhd.