PPB may declare higher final dividend

KUALA LUMPUR: PPB Group Bhd, which declared an interim single tier dividend of 8 sen per share for the financial year ending Dec 31, 2015 (FY15), may declare a higher final dividend if it sees higher profit contribution from its 18.3% associate Wilmar International Ltd.
Its CFO Leong Choy Ying said if the group is able to repeat its first half of the year (ended June 30, 2015, 1H FY15) performance during the second half of the year (2H FY15), it should be able to maintain its dividend payout for FY15.
“We hope to maintain what we’ve been paying last year. But if Wilmar does better, we hope to reward shareholders,” she told reporters at a briefing last Friday.
The group declared dividends of 23 sen per share, 25 sen per share and 20 sen per share for FY14, FY13 and FY12 respectively. Its interim dividend of 8 sen per share for FY15 is 1 sen higher than a year ago.
Managing director Lim Soon Huat said the group expects to achieve similar performance in 2H FY15 while the consolidated financial results in 2015 will continue to be substantially supported by Wilmar’s business performance.
For 1H FY15, the group’s net profit rose 28% to RM418 million from RM326 million a year ago while revenue rose 7% to RM1.96 billion from RM1.84 billion a year ago.
During the period, Wilmar contributed 63% to its overall profit. Lim said contribution from Wilmar usually ranges from 60-70%.

On a year-on-year basis, Wilmar’s contribution to the group’s profit were higher in both the first and second quarters this year, due to stronger performance from its oilseeds and grains segment, lower foreign exchange losses from shareholders loans and improved performance from its investment securities.
Commenting on prospects for FY15, Lim said the group is confident that the consumer products, grains and agribusiness results will remain positive despite the soft market.
“We are able to navigate the challenging times and our core businesses, particularly the food and agribusiness, will continue to perform well because our main products are food necessities. We are confident that consumer spending will continue to be resilient, supported by a stable job market and steady household income,” he said.
He said cinema admissions will continue to be driven by strong movie title releases while the environmental engineering segment should achieve higher revenue in line with the construction progress of contracts in hand. However, property sales are expected to be weak for the rest of the year due to weak market sentiment.
“The property segment has been seeing a slow down but there won’t be any major impact on our performance,” he added.
Despite the weak outlook on property, the group has two new projects in the pipeline namely mixed developments in Taman Megah, Petaling Jaya and New World Park in Penang.
Its property division COO Chew Hwei Yeow said it is looking to build residential and retail products on 3.6 acres in Taman Megah while the Penang project will likely have residential, retail and hotel components.
On the impact of the strengthening dollar, Lim said the group has seen an increase in its cost as its raw materials such as wheat and corn are imported from the US.
“This translates to higher cost but the higher cost has been cushioned by lower commodity prices so far. We’re watching the ringgit and will continue to hedge exposure for our stocks and purchases,” he said. “We have foreign currency contracts, hedge stocks and hedge shipment or purchases to minimise exposure,” he added.
While some of its capital expenditure (capex) is in dollars, Lim said it will be spent over the next two to three years thus it does not expect any major impact from currency movement.
The group has a total capex of RM570 million to be used over the next two to three years on new investments, upgrading of plant and machinery as well as expansion of its core businesses.
PPB’s share price closed 0.26% higher at RM15.22 with a total of 399,200 shares traded last Friday.