KUALA LUMPUR (March 5): PPB Group Bhd (KL:PPB) expects its grains and agribusiness division to benefit from the US-China tariff war, which is likely to lower American grain prices, particularly wheat and corn, helping to reduce costs.

PPB's grains and agribusiness arm, FFM Bhd, accounts for over 70% of revenue. This segment includes flour milling, animal feed manufacturing, grains trading, and livestock farming.

PPB owns an 80% interest in FFM.

FFM chief executive officer Jeremy Goon said at a briefing that the US-China tariff war will prompt China to seek alternative grain sources, creating a demand gap for American grains and leading to bearish market expectations.

He added that Australia's strong wheat harvest had also resulted in ample supplies, making wheat prices volatile but expected to remain stable and low.

"We expect prices to be favourable for our business in the first half of the year. However, the second half will largely depend on weather conditions," he said.

Commenting on the flour market, Goon noted that Malaysia is relatively saturated with little growth in flour consumption over the past few years. In contrast, Thailand and Vietnam present growth opportunities.

FFM owns and operates five flour mills in Malaysia and two in Vietnam. Additionally, it has a presence in Thailand through a 43.4% stake associate, and in China via seven associates, where it all own a 20% stake.

Meanwhile, Goon is optimistic about the feed division's prospects, citing consistent feed quality that led to a strong performance last year.

"We expect this trend to continue. Our ability to procure high-quality raw materials and maintain feed quality gives us a competitive advantage.”

“Regarding poultry, much will depend on government policies, including price ceilings and egg subsidies. However, I am also optimistic that consumption will increase this year, benefiting both layer and breeder farms,” he added.

In terms of strategy going forward, the division aims to grow its revenue by supplying to the Horeca sector (hotels, restaurants, and cafés).

"With our diverse range of products, we offer a complete suite from a single supplier, giving us a competitive advantage. We are intensively developing our channels into food service and the Horeca sector, expecting greater market penetration and a larger market share as the year progresses," Goon said.

The segment also aims to retain its customer base and enhance market share with competitive pricing, which will be achieved through continuous investment in plant modernisation and automation to improve quality and efficiency.

For the consumer products segment, which contributes around 15% of the group’s revenue, PPB group chief financial officer Yap Choi Foong said increasing trade promotion costs had impacted profitability. Going forward, she expects promotional expenses to remain elevated.

The segment's profit declined by 75% to RM6.45 million in the financial year ended Dec 31, 2024 (FY2024), from RM25.97 million in FY2023.

PPB said it aims to explore and identify new agencies or brands to improve profitability of the segment.

This includes developing new products, either internally or externally, with original equipment manufacturer factories, putting emphasis on appeal to meet the changing preferences and trends of existing and new consumers.

Shares of PPB were up 36 sen or 3.3% at RM11.12 at the time of writing on Wednesday, giving the group a market capitalisation of RM15.82 billion. 

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