Thailand
Malaysia: PPB sees up to 38% increase in utility cost following electricity tariff hike
KUALA LUMPUR (March 3): PPB Group Bhd sees an increase of between 30% and 38% in its utility cost, after the government removed electricity subsidies and raised the power tariff for medium- and high-voltage users to a surcharge of 20 sen per kWh from Jan 1.
PPB managing director Lim Soon Huat said the group is improving its operational efficiency as the new electricity rate would have a “significant” impact.
“It is not a small amount. Looking at our utilisation, it could impact us significantly. And looking at the numbers, it is between RM20 million and RM25 million (the increase in cost) across the group,” Lim said.
He was speaking at an analyst and media briefing on PPB’s results for the financial year ended Dec 31, 2022 here on Friday (March 3).
“We understand the rationale behind the increase in utility, electricity costs is actually the removal of subsidies. Given the situation now in Malaysia, I believe this is an area where we have to deal with.” Lim said.
“I don’t think the cheap electricity cost will continue if fuel cost and electricity cost continue to go up. In order to sustain, we will have to learn how to deal with high utility cost moving forward.”
Jeremy Goon, the chief executive officer of FFM Bhd, which is a subsidiary of PPB, gave an input that electricity cost take up to 40% of the flour miller’s production cost.
Goon said FFM experiences a 16% increase in overall production cost from the rise in electricity cost.
During the briefing, PPB also revealed that its total capital and other commitments (capex) for the next five years has been reduced to RM842 million. The diversified conglomerate announced in August last year that it was setting aside RM875 million for capex.
PPB group chief financial officer Yap Choi Foong said that since August, about RM33 million has been spent on upgrading the MBO Cinemas that PPB had acquired, and also on modernising plants, and improving the human resources system.
Of the latest RM842 million for capex, PPB is channelling the highest amount to its grains and agribusiness (RM396 million), as well as a substantial amount of RM357 million to its film exhibition and distribution business. The group is allocating RM66 million towards the consumer products business, and RM23 million for the property business.
Koh Mei Lee, the CEO of PPB’s indirect wholly owned subsidiary Golden Screen Cinemas Sdn Bhd (GSC), said on Friday the influence of local movies had strengthened, with the segment’s market share rising to 20% in 2022, from 5% previously.
GSC currently has a total of 502 screens across 54 locations in Malaysia, with 23 more new screens targeted to be opened in 2023.
At the time of writing on Friday, PPB was trading 10 sen lower at RM17.50 per share, bringing the group a market capitalisation of RM24.92 billion.
Source: https://www.theedgemarkets.com/node/657670