CEO Morning Brief

PPB 3Q Profit Halves to RM372.6 Mil on Lower Wilmar Contribution

Publish date: Thu, 30 Nov 2023, 08:43 AM
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TheEdge CEO Morning Brief
PPB 3Q profit halves to RM372.6 mil on lower contribution from Wilmar

KUALA LUMPUR (Nov 29): PPB Group Bhd’s net profit for the third quarter ended Sept 30, 2023 (3QFY2023) fell 52.52% to RM372.55 million, from RM784.75 million in the corresponding quarter a year earlier, largely due to lower contribution from its 18.8%-owned associate, the integrated agribusiness giant Wilmar International Ltd.

PPB's quarterly revenue dropped 11.63% to RM1.46 billion from RM1.65 billion a year ago, its bourse filing on Wednesday showed, mainly due to the group's core grain and agribusiness segment recording a 13.82% lower topline of RM1.06 billion versus RM1.23 billion previously.

“The directors do not recommend the payment of any dividend for the third quarter under review,” its bourse filing read.

During the reporting quarter, PPB’s share of results from associates dropped 61.34% to RM284.88 million from RM736.94 million previously, with profit contribution from Singapore-listed Wilmar dropping 63% to RM268 million from RM721 million.

The group’s grains and agribusiness segment, meanwhile, posted a 128.57% rise in profit before tax (PBT) to RM96.39 million from RM42.48 million previously, despite the lower turnover, as it recorded a gain of RM31.3 million from the disposal of PT Pundi Kencana that was completed on Sept 11 this year.

PBT of its other segments — consumer products, film exhibition and distribution, as well as property — all posted declines.

For the nine months ended Sept 30 (9MFY2023), the group's net profit dropped to RM952.91 million from RM1.78 billion in 9MFY2022, with revenue dipping 1.76% to RM4.46 billion from RM4.54 billion. Contribution from Wilmar during the period dropped 57% to RM728 million from RM1.71 billion previously, which dragged on its cumulative bottomline, despite PBT of the group's core businesses climbing 250% to RM319 million from RM91 million.

Looking ahead, PPB said the group is optimistic that its grain and agribusiness segment will continue to perform well, premised on its “good performance” for 9MFY2023.

Nonetheless, the group noted that increasing global geopolitical tensions may trigger further volatility in global grain prices, while a prolonged weak ringgit may also drive up raw materials costs and pressure margins.

On its film exhibition and distribution segment, it noted that the recent actors and writers’ strikes in Hollywood had led to the deferment of several key blockbuster titles, which will affect the admissions and box office collections in the final quarter of FY2023.

“Management is re-prioritising several of its initiatives and optimising costs to navigate the challenges faced by the cinema industry,” it said.

“Whilst the property segment is planning for the launches of new development projects, revenue from sales of the remaining units of completed projects is expected to be modest in the 4QFY2023. During this transition period, we will continue our efforts to improve the occupancy and footfalls of our malls,” it added.

PPB also noted that Wilmar’s performance will also substantially contribute to the group’s overall profitability.

Shares in PPB closed eight sen or 0.57% lower to RM13.98 on Wednesday, valuing the group at RM19.89 billion.

Source: TheEdge - 30 Nov 2023

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