PETALING JAYA: PPB Group Bhd
’s expectation for an improved efficiency in 2022 could possibly be tempered by the rising price of raw materials because the Russia-Ukraine battle continues to jolt supply chains and push commodity costs greater.
According to PPB managing director Lim Soon Huat, the rising price of raw materials will have an effect on margins, significantly for its grains and agribusiness phase – which is the biggest contributor to group income.
“Our grains and agribusiness has continued to be challenging given the rising cost of raw materials and disruption in the supply chain.
“We have not seen this level of wheat cost for the last 13-14 years. And wheat prices will continue to go up and that is going to affect our margin. And the fact that we can’t pass on all the cost to consumers is going to be challenging for our agri business,” he stated at a media and analyst briefing immediately.
He added that the group is at a stage the place it has “no choice but to gradually pass on the cost to the consumers.”
The group has began to boost a few of the costs of its items – like flour and bread, for instance – for the reason that begin of the 12 months.
Meanwhile, FFM Bhd chief government officer Jeremy Goon highlighted that commodities globally have been at a limit-up, if not already.
“Wheat is now US$10 (RM41.90) per bushel, it used to be US$6 (RM25.14) at mid-last year,” he stated, noting that wheat made up about 85%-90% of manufacturing price for its flour mills.
“If it were not for the disruptions and shock from the Black Sea, I think it is going to be more positive for 2022. But unfortunately, we now have to deal with another shock in the system which will affect the economic recovery and consumer sentiment,” stated Lim.
However, Lim was constructive on the opposite segments of the group’s enterprise reminiscent of its property and movie distribution (GSC Cinemas) segments.
Additionally, PPB’s efficiency this 12 months will proceed to be supported by its affiliate firm Wilmar International which is having fun with unprecedented excessive crude palm oil costs.
