Wilmar to boost PPB Group's earnings

KUALA LUMPUR: PPB Group Bhd is looking forward to an improved performance for the second half of the financial year ending Dec 31, with better results from its 18.3% associate Wilmar International Ltd.

Managing director Lim Soon Huat said: “We expect Wilmar to perform better in the second half, driven by its sugar and oil palm plantation businesses.”

He also expected the group’s core businesses to do better in the remaining half-year.

PPB’s major operations include flour and feed milling, grains trading, marketing, distribution and manufacture of consumer products, film exhibition and distribution, as well as property investment and development.

The group had posted a 13% decline in net profit to RM166.4mil for the second quarter ended June 30, dragged down by Wilmar’s lower palm oil refining margins, higher losses in sugar milling and negative contribution from China.

The second quarter saw revenue contribution mainly from PPB’s grains trading, flour and feed milling division, which grew 23% year-on-year to RM620.9mil on the back of better sales volume for all its regions.

Meanwhile, director Datuk Ong Hung Hock said the group was bullish on wheat prices, on the back of the political tension in Ukraine, which is the world’s fifth largest wheat exporter.

Other supporting factors included dry weather in Australia, a near-completed harvest season in Western Europe and lower expected production in Canada.

On another matter, Lim said the group was not concerned with talk on the proposed lower limit on foreign ownership of oil palm plantations in Indonesia.

He said the market had “overreacted” to the news that Indonesia proposed to lower the limit 30%.

“The bill is still in draft form, and given a new president has just been elected, I doubt this bill will be his priority. In the meantime, we will wait for the government to give more clarity on the matter,” he said.

Singapore-listed Wilmar International Ltd , owns plantations in Indonesia.

“PPB Group does not have any plantations in Indonesia, so it does not affect us,” said Lim. On the group’s film and exhibition and distribution business, Golden Screen Cinemas (GSC) chief executive Koh Mei Lee said the group would be opening three new cinemas in Klang Parade, NU Sentral and Quill City Mall in the fourth quarter this year.

This will bring GSC’s total screens to 271, she said.

Meanwhile, on the property front, PPB will be launching the first phase of its mixed development project in Puteri Harbour, Iskandar in the fourth quarter of 2014. “We have received a lot of enquiries, even before the launch. So we expect interest to be good,” said chief operating officer of property division Chew Hwei Yeow.

The development has an estimated gross development value of RM1.5bil and will comprise four blocks of high-rise condominiums, offices and retails outlets.

Chew expected the development to contribute to the PPB’s revenue in the financial years 2015 and 2016.

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