PPB Group achieved 9% increase in revenue whilst pre-tax profit remained unchanged at RM591 million for 1H2021

FINANCIAL HIGHLIGHTS FOR 1H2021

• PPB Group revenue increased by 9% to RM2.2 billion in 1H2021 mainly due to higher revenue from the Grains and Agribusiness segment.
• Group pre-tax profit remained stable at RM591 million. The weaker performance recorded by the Group's core segments was mitigated by the increase in profit contribution from its 18.6% associate, Wilmar International Limited (Wilmar). Wilmar's profit contribution was RM594 million, up 33% compared with 1H2020.
• Profit for the period was higher at RM586 million, up 13% compared with RM520 million recorded in 1H2020. Earnings per share was at 41.17 sen, 13% higher compared with 1H2020 of 36.55 sen.

DIVIDEND
PPB has declared an interim dividend of 10 sen per share for the financial year ending 31 December 2021 payable on 28 September 2021 to shareholders whose names appear in the Record of Depositors on 10 September 2021.

REVIEW OF OPERATIONS
The results of PPB's main business operations for 1H2021 are summarised as follows :-

• Grains and Agribusiness segment revenue for 1H2021 increased by 9% to RM1.7 billion whilst segment profit was lower at RM52 million compared with RM181 million in 1H2020. The sharp rise in commodity prices led to a significant increase in raw material costs of flour and feed products; and with limited price-in mechanism, gross profit margin compression was seen across the sub-segments.
• Consumer Products segment revenue for 1H2021 remained stable at RM320 million. Segment profit was significantly lower at RM0.4 million for 1H2021 compared with RM20.1 million recorded for the 1H2020 mainly due to the one-off gain of RM10 million on the step-acquisition of an associate in 1H2020, in addition to the increased cost of goods sold on the back of the rising commodity prices.
• Film Exhibition and Distribution segment revenue declined significantly by 48% to RM41 million and recorded segment loss of RM59 million, a decline of 3% from 1H2020. The performance of this segment was significantly impacted by the prolonged closure of cinemas during the Movement Control Order ('MCO').
• Environmental Engineering and Utilities registered higher segment revenue at RM94 million, up 63% whilst segment profit decreased by 39% to RM4 million as operations were impacted by the lockdown and reduced operation capacity with the MCO in place during most of 1H2021.
• The Property segment revenue and segment profit increased by >100% to RM53 million and RM6 million respectively. This was mainly attributable to higher revenue recognised from the development of the Megah Rise project.

PROSPECTS FOR 2020
Global agricultural commodity prices have risen substantially this year, particularly for food commodities. It is expected that the food commodity prices will remain highly volatile given the potential disruption of supply in major producing countries affected by poor weather and rising demand of the grains as more countries' economies start to reopen.

Performance of the Grains and agribusiness segment has been adversely impacted by the spike in commodity prices, particularly in the second quarter of this year. Gross profit margin compression was seen across various sub-segments of this segment. Management will continue to navigate the challenging situation in dealing with a highly volatile commodity market. Riding on the Group's experience in both the commercial and technical aspects, the Grains and agribusiness segment aims to deliver an improved set of results for the following quarters.

The Consumer products segment is expected to perform satisfactorily as it continues to expand its market place through the food services channel and e-commerce platform.

The acceleration of the National Immunization Program (NIP) and the subsequent lifting of restrictions will be key for the recovery of the Film exhibition and distribution segment. During this transition period of the NIP, management will continue its efforts to expand online business initiatives pending the reopening of its enlarged cinema chain with the newly acquired cinema assets of the former MBO cinema circuit. Stringent cost control remains as our top priority to improve operating cash flow and financial performance.

The Environmental engineering and utilities segment will continue to focus on replenishing its order book and exploring new project opportunities.

Performance of the Property segment continued to be impacted by the ongoing Movement Control Order. Management remains steadfast in working on various initiatives to improve footfall in its malls and completing the development of the Megah Rise project.

The Covid-19 pandemic will continue to weigh down on the Film exhibition and distribution and Property segments. The Grains and agribusiness segment, which is in the production and distribution of staple food and services, is expected to ride through the challenging operating environment and to deliver a satisfactory set of results for the rest of the year. Wilmar's performance will continue to contribute substantially to the overall profitability of the Group.

Contact :-
Ms Koh Mei Lee, Head of Corporate Affairs of PPB Group Berhad
Telephone : 012-2062831
Email : [email protected]

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