KUALA LUMPUR (Feb 4): PPB Group Bhd has said its investment in Wilmar International Ltd will continue to contribute significantly to its bottom line, particularly as the Singapore-listed associate company continues to expand.
"Wilmar has a very strong integrated business model, with a very diversified portfolio of businesses," said PPB managing director Lim Soon Huat.
"Each of the businesses is expanding and contributing significantly to its profitability and has a strong presence in many countries, particularly in China, Indonesia and India.
"Having a significant stake in Wilmar allows PPB to benefit from Wilmar's business expansion and growing profitability," he told a virtual media and analyst briefing today.
For the financial year ended Dec 31, 2020, PPB's share of Wilmar's net profit increased to RM1.24 billion, from RM960 million in the previous year.
On PPB's grains and agribusiness, Lim said the segment will continue to expand locally and internationally and contribute to the group’s profitability.
PPB is currently constructing a new wheat flour mill, with a capacity of 500 tonnes per day, at VFM-Wilmar Flour Mills Co Ltd's existing factory location in Quang Ninh province in northern Vietnam for US$19.7 million.
Lim said the construction expenses will come from the RM425 million capital expenditure planned for the grains and agribusiness segment over a four-year period. The money will also be used for investments in flour mills located in China, and the construction of a silo and maize facility on Pulau Indah.
Meanwhile, FFM Bhd general manager Jeremy Goon said there are large spikes in the prices of most agricultural commodities, noting that these high prices are here.
"Besides that, we have seen increases in freight rates and packing materials as well. Some of these increase have been quite significant," he added.
Both Goon and Lim, however, stressed that FFM, an 80%-subsidiary of PPB, will not be looking at increasing prices for now.
Goon noted that demand for its consumer products is still strong, despite the imposition of various forms of the Movement Control Order by the government.
Although the production of FFM's Massimo bread was halted for seven days last month amid Covid-19 infections among its workers, he said all of its factories are now running at full capacity.
Shares in PPB were trading 28 sen or 1.48% lower at RM18.58 in the afternoon session, valuing the group at RM26.57 billion.