KUALA LUMPUR (July 20): PPB Group Bhd has cautioned investors that its financial result for second quarter ended June 30, 2016 (2QFY16) will be adversely affected, after its 18.55%-associate, Singapore-listed Wilmar International Ltd issued a profit warning yesterday.

In a filing with Bursa Malaysia today, PPB said while the group’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 2QFY16.

“Shareholders and investors are advised to exercise caution, when dealing in the shares of the company,” it said.

PPB added that details of the the group’s financial performance for 2QFY16 and first half (1HFY16) will be disclosed, when it announces its consolidated financial results for the respective periods.

According to Wilmar’s filing with Singapore Stock Exchange yesterday, Wilmar is expected to report net losses of approximately US$230 million in 2QFY16, as a result of challenging operating conditions in the quarter, after a preliminary review of the unaudited financial results of the company and its subsidiaries.

“For 1HFY16, the group is still expected to be profitable, although profit is expected to be significantly lower than the corresponding 1HFY15,” said Wilmar.

Wilmar also pointed out that 2QFY16 losses were largely attributed to the manufacturing sub-segment within oilseeds and grains, and partially to the sugar segment.

The company said “untimely purchases of raw materials, specifically soybeans, in a highly volatile and disruptive market”, resulted in significant losses in the oilseeds and grains segment.

As for the sugar segment, the losses for 2QFY16 are expected to be greater on-year, because of the delay in harvesting due to rain and accounting mark-to-market losses on hedges, as a result of higher sugar prices.

“Notwithstanding this one-time loss in 2QFY16, the group’s business model remains intact and resilient. The long term prospects of the group are stronger, as it continues to execute on its stated growth strategy, demonstrated by recent developments in ventures in Vietnam and India,” explained Wilmar.

Barring unforeseen circumstances, the group said the operating environment for the rest of the year is expected to normalise.

Wilmar said further details of the financial performance will be disclosed, when it announces its unaudited consolidated financial results on Aug 11.

Wilmar advised its shareholders and potential investors to exercise caution, when dealing in its shares.

At 12.30 p.m., shares of PPB were traded 34 sen or 2.05% lower at RM16.26, for a market capitalisation of RM19.28 billion. Earlier, the counter fell as much as 38 sen or 2.29% to RM16.22, before paring some losses.