(From left) PPB Group Bhd’s property division PPB Properties’ CEO Low Eng Hooi, GSC Group CEO Koh Mei Lee, FFM Group CEO Jeremy Goon, PPB Group Bhd group MD Lim Soon Huat, PPB Group Bhd CFO Yap Choi Foong, and PPB Group Bhd company secretary Mah Teck Keong at the press briefing on PPB Group Bhd’s interim results and outlook on Thursday. (Photo by Shahrill Basri/The Edge)

KUALA LUMPUR (Sept 5): PPB Group Bhd (KL:PPB) is optimistic about its second half of 2024’s outlook, saying that the strengthening of the ringgit against the US dollar could lead to higher consumer spending and reduced raw materials cost.

“I think we are optimistic in all the segments, and it should be better than the first half, and [thus,] we are quite confident to deliver satisfactory results,” PPB group managing director Lim Soon Huat said at a press briefing on Thursday.

The four key business segments under PPB are grains and agribusiness, film exhibition and distribution, consumer products, and property.

Lim said the stronger ringgit is favourable to the conglomerate’s procurement of raw materials, which are mostly imported. But he added that a stable currency environment, rather than big swings, is more desirable for better planning.

He also noted that the positive currency effects would be time-lagged, as the group typically hedges its currency exposure for a span of three months.

Notably, the group’s consumer products, which has a mix of 15% agency products and 85% in-house products, have minimal export exposure.

As for the group’s film division, PPB hopes to benefit from several blockbuster Hollywood titles in the second half.

On expansion to other markets, the group said it has no plans yet to venture into other Asean countries, and will remain focussed in Malaysia and Vietnam.

PPB said its property division is completing the acquisition of 3.91 acres of land in Kwasa Damansara for the development of a low-density condominium project.

The segment also saw healthy rental renewals for investment properties, as 80% of the group’s tenants have renewed leases at reversion rates of 5% to 15%.

PPB said its 18.8%-owned associate Wilmar International Ltd will continue to contribute substantially to its overall profitability. When asked about the cooking oil contamination scandal in China, Lim assured that it has no impact on Wilmar, given the group’s established track record in the country.

Focus on supply chain management, operational efficiency

Going forward, PPB said it will prioritise strengthening supply chain management and operational efficiency to mitigate potential disruptions arising from climate changes, geopolitical conflicts, and economic and financial market volatility.

On volatility in the grains market, Lim said: “I think that is part of the business challenges that we have to deal with. But [what matters] is how well we deal with the market price fluctuation”.

“We can’t avoid market volatility. And going ahead, I think we are going to see more volatility. We wouldn’t know what is going to happen to geopolitical development.”

Lim said events such as the Russia-Ukraine war has made the group more capable of managing its sourcing and supply chain, as well as leverage on its technical capabilities in product formulation.

For the next five years, the group has earmarked a total of RM787 million for capital expenditures.

This includes RM392 million for investments in flour mills in China, and the construction of silo and maize facility in Malaysia; RM296 million for seven new cinemas in Malaysia and the upgrading of existing cinemas; RM67 million for system upgrades and automation for the consumer products division, and RM32 million for the refurbishment of Cheras Leisure Mall.

PPB shares closed eight sen or 0.6% higher at RM14.34 on Thursday, valuing the group at RM20.4 billion.