PPB shares fall after Wilmar warns of loss

PETALING JAYA: PPB Group Bhd fell in trading yesterday after its Singapore associate, Wilmar International Ltd, issued a profit warning of a US$230 million (RM919.9 million) net loss for the second quarter ended June 30, 2016 on challenging operating conditions.
The shares dropped to a low of RM16.22, down 38 sen or 2.28%, half way through morning trade yesterday.
At the closing bell, PPB was among the top losers, down 34 sen to RM16.26 with 500,000 shares traded.
In a stock exchange filing yesterday, PPB attached a copy of an announcement made by Wilmar to the Singapore Exchange on July 19, 2016 based on a preliminary review of unaudited financial results for Wilmar’s Q2 earnings.
“While PPB’s share of Wilmar’s results is yet to be determined, it is expected that this would have an adverse impact on the financial results of the PPB Group for Q2’2016,” PPB said.
For the six months ended June 30, the group still expects a profit but significantly lower than the corresponding six-month period ended June 30, 2015. 
The company reported a net profit of US$239.4 million for the first quarter ended March 31, 2016.
The second-quarter losses were largely attributed to the manufacturing sub-segment within oil seeds and grains and partially to the sugar segment.
Untimely purchases of raw materials, specifically soybeans, in a highly volatile and disruptive market, resulted in significant losses being recorded in the segment, Wilmar said.
Also, unexpected flooding in Argentina affected the soybean harvest, and heavy participation by funds in the futures markets, among other factors, contributed to the very volatile markets. 
“Notwithstanding this one-time loss in Q2’2016, the group’s business model remains intact and resilient,” Wilmar said.
The long-term prospects of the company are stronger as it continues to execute its stated growth strategy, demonstrated by recent ventures in Vietnam and India.
“Barring unforeseen circumstances, operating environment for the group for the rest of the year is expected to normalise,” Wilmar said.
Wilmar said it will release its unaudited consolidated financial results for its second quarter and first half of 2016 on Aug 11.