PPB Group upbeat on Wilmar contribution
KUALA LUMPUR: PPB Group Bhd is optimistic that its 18.5 per cent associate, Wilmar International Ltd, will continue to contribute significantly to the company’s overall revenue this year.
Chairman Tan Sri Oh Siew Nam said Wilmar was a well-diversified conglomerate capable of weathering any challenges, including the recent fall in crude palm oil (CPO) prices, which now averaged RM2,000 per tonne.
“Although the fall in CPO prices may affect it (Wilmar) a little bit, it should be doing well because it is a diversified company.
“Therefore, it will continue to contribute significantly to the PPB’s overall group revenue,’’ he said.
The market is expected to be more volatile this year with the ongoing trade war between China and the United States.
“Nobody knows what will happen but I am sure we will do quite satisfactorily this year,” said Oh after PPB’s shareholders meeting, here, yesterday.
Group managing director Lim Soon Huat said it would continue to grow its core segments of grains and agribusiness, consumer products, film exhibition and distribution (cinema) and environmental engineering and utilities business.
“We have set aside RM831 million in capital expenditure for the next two to three years. The bulk of the allocation will be spent on cinema and flour milling expansions.
“We are also looking at businesses to complement our core business segments for greater synergy, amid the uncertainty in the global market and volatile environment,” he said.
PPB Group is, however, cautious about new investments and prefers to focus on its existing business ventures.
“Automation is the key to reducing operational cost. In terms of raw materials, particularly wheat for our flour milling, we buy from traditional suppliers in America and Australia, and other types of wheat from non-traditional suppliers such as Ukraine to mitigate the higher cost,” said Lim.
PPB director Datuk Ong Hung Hock expects overall consumers demand to slow.
But with proactive measures, such as innovation in its production facility, he said the company would be able to maintain its sales volume while reducing operation cost.
“We will innovate in areas that we know best to add more value, rather than take the risk in noncore segments or unrelated businesses.
“The cost will be kept down through automation while finding alternative sources for raw materials without compromising the quality,” he said.
Ong said the company would use a robotic system in its logistics segment while adopting a push-and-pull method rather than conventional stacking.
PPB’s net profit decreased 9.1 per cent to RM1.07 billion last year from RM1.18 billion in 2017 due to lower contribution from Wilmar as well as weaker grains and agribusiness and consumer product segments.
However, revenue rose 5.7 per cent to RM4.53 billion from RM4.28 billion, largely driven by the grains and agribusiness, environmental engineering and utilities, and film exhibition and distribution segments.