PPB margins affected by rising uncooked supplies prices, provide disruptions

PETALING JAYA: PPB Group Bhd‘s expectation for an improved efficiency in 2022 might be tempered by the rising price of uncooked supplies because the Russia-Ukraine battle continues to jolt provide chains and push commodity costs increased.

In response to PPB managing director Lim Quickly Huat, the rising price of uncooked supplies will have an effect on margins, notably for its grains and agribusiness phase – ​​which is the biggest contributor to group income.

“Our grains and agribusiness has continued to be difficult given the rising price of uncooked supplies and disruption within the provide chain.

“We have now not seen this degree of wheat price for the final 13-14 years. And wheat costs will proceed to go up and that’s going to have an effect on our margin. And the truth that we won’t go on all the associated fee to shoppers goes to be difficult for our agri enterprise,” he stated at a media and analyst briefing right now.

He added that the group is at a stage the place it has “no alternative however to regularly go on the associated fee to the shoppers.”

The group has began to boost a number of the costs of its items – like flour and bread, for instance – for the reason that begin of the yr.

In the meantime, FFM Bhd chief govt officer Jeremy Goon highlighted that commodities globally had been at a limit-up, if not already.

“Wheat is now US$10 (RM41.90) per bushel, it was US$6 (RM25.14) at mid-last yr,” he stated, noting that wheat made up about 85%-90% of manufacturing price for its flour mills.

“If it weren’t for the disruptions and shock from the Black Sea, I feel it’s going to be extra constructive for 2022. However sadly, we now should cope with one other shock within the system which is able to have an effect on the financial restoration and shopper sentiment , stated Lim.

Nonetheless, Lim was constructive on the opposite segments of the group’s enterprise comparable to its property and movie distribution (GSC Cinemas) segments.

Moreover, PPB’s efficiency this yr will proceed to be supported by its affiliate firm Wilmar Worldwide which is having fun with unprecedented excessive crude palm oil costs.


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