PPB earnings may be lower due to higher costs

PPB Group Bhd expects earnings for the financial year ending December 2005 to be eroded by high raw material costs and ocean freight rates, chairman Datuk Oh Siew Nam said.  

“The year 2004 was very good for us. We had our strongest performance to date. The board is conservative that profit this year may be lower than in 2004 due to high raw material costs and ocean freight rates,” Oh said during a press briefing in Kuala Lumpur yesterday to announce last year’s financial results.  

For the period under review, PPB also declared a 20% increase in gross dividend to 30 sen per share, comprising 7.5 sen tax exempt and 22.5 sen less tax, he said.  

Corporate affairs senior manager Koh Mei Lee said the company's yearly dividend had been on the uptrend over the last five years, except for 2002, when it declared a special dividend in addition to the annual dividend.  

She said palm product prices were expected to remain volatile, but higher crop production should mitigate some of the negative effects of lower prices. 

PPB's pre-tax profit rose 3.7% to RM733.51mil on the back of some RM11bil in sales for 2004, due to better contributions from oil palm plantations, edible oils refining and shipping operations, as well as investment activities, she added.  

The key contributor to the increase was the strong financial performance of its plantation unit, PPB Oil Palms Bhd, which benefited from further improvement in palm product prices and higher crop production, she added.  

Koh said crude palm oil (CPO) prices were on the uptrend in 2004, resulting in PPB Oil achieving an average realised price of RM1,610 per tonne. Production of fresh food bunches rose 10% to 1.27 million tonnes, while CPO production increased by 17% to 338,409 tonnes.  

For 2004, profit performance from edible oils refining and trading improved significantly on better margins due to higher selling prices.  

The group’s refineries processed 3.2 million tonnes of refined edible oils, an increase of 11% over the previous year on higher CPO production throughout the year thanks to favourable weather conditions, she added. 

She said PPB Leisure Holdings Sdn Bhd, the film exhibition and distributing unit, achieved an 18.8% increase in revenue to RM104.3mil driven by higher admissions and the opening of Golden Screen Cinema’s 12-screen cineplex at Gurney Plaza in Penang in January last year.  

Admissions rose to 11.2 million from 9.6 million due to more screenings of films locally simultaneous with their release in the United States and increased releases of local Malay and Asean movies, she added.  

Property arm PPB Hartabina Sdn Bhd maintained its profit performance despite lower unit sales of the Phase Two Bukit Segar residential project in Cheras, Kuala Lumpur. 

The environmental engineering, waste management and utilities division also improved its revenue by 32% to RM140.5mil.  

The sugar, grains trading, flour and feed operations faced trimmed profit margins on higher raw material prices and freight rates. – By YEOW POOI LING 

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