PPB expects more headwinds in 2026: Group MD

KUALA LUMPUR: PPB Group Bhd anticipates a persistently challenging operating environment throughout 2026, citing geopolitical tensions, fluctuating commodity prices, and ongoing cost pressures. Managing Director Lim Soon Huat outlined ongoing concerns regarding geopolitical developments, especially in the Black Sea and Middle East, coupled with commodity price volatility and rising costs, all set to impact the group's operations.

Despite this, Lim emphasized the company's focus on areas they can control, during the analyst and media briefing. Earlier this week, PPB reported a 20.8% increase in net profit to RM338.1 million for the second quarter of 2026, driven by stronger contributions from Wilmar International Ltd and improved performance from its core grains and agribusiness.

This marks a significant contrast to the RM279.8 million net profit in the same period last year, even as revenue declined by 3% to RM1.31 billion. Lim reiterated the group's commitment to operational efficiency, cost management, and investment in promising long-term value areas. While some businesses face near-term hurdles, he noted promising developments across the group.

Speaking about the grains and agribusiness segment, Lim said unresolved conflicts in the Middle East continue to affect global trade and economic activity, alongside weather-related disruptions and price volatility in grain supplies. He highlighted logistics, energy, and other input costs as key cost pressures in the second half of 2026.

The stronger ringgit against the US dollar has provided some respite to grain importers, although margin pressure is expected to persist. To mitigate risks, Lim said the group will strengthen its grain procurement strategy through diversified sourcing, careful inventory management, and close monitoring of global grain market developments.

Domestically, PPB plans to maintain product quality, boost operational efficiency, and provide value-added services to customers to strengthen relationships, boost volume growth, and sustain revenue amidst increasing competition. Despite the challenging environment, Lim expressed cautious optimism about the grains and agribusiness segment delivering satisfactory performance in the second half of the year.

In the consumer products segment, Lim hinted at expanding the product portfolio with new offerings to cater to changing consumer spending patterns and growing demand for value-oriented products. Despite rising costs, competition, and margin compression, he expects the segment to perform satisfactorily by leveraging PPB's extensive distribution network and logistics capabilities.

The film exhibition and distribution segment recorded a profit of RM21.9 million in Q2, up from a loss of RM7.3 million in Q1, driven by higher admissions and a stronger box office lineup. Lim remains cautiously optimistic about the segment's prospects, citing positive momentum from the summer blockbuster season and a robust pipeline of Hollywood and local film releases in the second half of 2026.

The group plans to enhance its cinema offerings, optimize screening strategies, and diversify non-ticket revenue streams while maintaining disciplined cost management. For the property segment, the Lumina Bedong Township development is on schedule with stable sales momentum. Lim said the group will continue driving sales through targeted marketing campaigns and promotional initiatives.

The investment property sub-segment continues to show stable occupancy and footfall across its malls, with strategic asset enhancement and upgrading works remaining a priority.