KUALA LUMPUR: Diversified conglomerate PPB Group Bhd is optimistic on the outlook for the second half of the year buoyed by more consumer spending but at the same time will keep an eye on how to deal with the rising cost of doing business.
Managing director Lim Soon Huat said the company is aware that the operating environment will not be rosy but it believes its core business is back on the right track.
“We have put in place measures on how to mitigate some of the cost escalation that we are facing in our businesses.
“For the grains and agribusiness segment, for example, we will continue our efforts to preserve margins by improving our product performance and enhancing operational efficiency,” he said during a virtual press and analyst briefing today.
Lim said grain commodity prices have now stabilised closer to the pre-Russian-Ukraine conflict level as global supply concerns eased.
However, the flow-through effect of high raw material prices on production costs as well as high logistics costs will remain, given the lag effect of procurement and production cycles, in addition to limitations in price-in mechanism.
Meanwhile, he said the company expects its consumer products segment, which mainly distributes basic necessities, to perform satisfactorily on the back of improving consumer sentiment as the country transitions into endemicity.
Commenting on the price inflation, FFM Group director and chief executive officer Jeremy Goon said “people have absorbed the price increase quite well”.
FFM Group is an 80 per cent subsidiary of PPB Group.
“The price of raw material everywhere in the whole world has gone up but perhaps they will be switching their product category and maybe move away from the premium category... but the consumption remains,” he said.
Touching on the film exhibition and distribution segment, PPB Group head of corporate affairs and GSC Group chief executive officer Koh Mei Lee said the segment is expected to contribute significantly to the group’s revenue in the second half of the year, following the opening of new cinemas.
“For MBO, out of 18 locations, we have now opened 16 locations and will be opening two more soon, including one in Bintulu which is finishing its renovation and expected to be opened by the end of this quarter,” she said.
In March 2021, GSC acquired the majority of cinema assets from the MBO chain.
Koh noted that the group has not increased the movie ticket price, therefore it is still an affordable form of entertainment.
Asked if the recent cancellations of Hollywood movies such as “Thor: Love and Thunder” would impact the group’s revenue, she said: “Fortunately, Malaysia does not only rely on Hollywood titles, therefore it does not really feel the pinch.
“We also get titles regionally... from Thailand, Indonesia, South Korea and also our local movies. In fact, our local movies are now playing much more important roles in our box offices.
“For example the movie Mat Kilau has actually collected the largest or the best performing debut, earning RM87 million. So even though there was a cancellation of Thor in July, Mat Kilau has more than made up for it. And this month we release another local movie Air Force,” she said.
On purchasing power and movie tickets, she said there is a pent-up demand among movie goers.
In May, the segment has recovered to 80 per cent of the pre-pandemic level and June and July box offices had exceeded the corresponding months’ in 2019.
“We need to expand on local production and regional purchases of movies to not be entirely dependent on the Hollywood titles,” Koh stressed.
Last week, the group announced a higher net profit of RM693.41 million for the second quarter ended June 30, 2022 from RM183.47 million, while revenue rose to RM1.58 billion from RM1.08 billion previously.
The company which engages in food production, agriculture, waste management, film distribution, property investment and development declared an interim dividend of 12 sen per share, payable on Sept 28, 2022.
At lunch break, shares of PPB Group rose 26 sen to RM17.26 with 165,900 shares transacted.
-- BERNAMA
