Joyce GohKUALA LUMPUR: PPB Group Bhd posted a 29% drop in net profit to RM271.4 million in its first quarter ended March 31, 2009 (1Q09) from RM384.3 million a year earlier, due mainly to higher raw material costs at its sugar refining and flour milling divisions.

Revenue was down 4.5% to RM772.5 million from RM808.9 million while basic earnings per share slid to 22.93 sen from 32.32 sen previously.

In a statement to Bursa Malaysia, PPB said lower revenue was recorded by its flour and animal feed milling, chemicals trading, and property investment divisions. Its core divisions and associate company Wilmar International Ltd also turned in lower contributions.

PPB said Wilmar contributed a profit of RM255 million for the quarter under review.

“The global financial and economic crisis is expected to affect the group’s performance for the rest of 2009 in respect of lower demand and margins for the goods and services offered by the group,” PPB said.

“In addition, changes in prices of raw materials and ocean freight will be the key factors affecting the group’s profitability. However, group performance for the year will still remain satisfactory,” it added.

PPB’s net assets per share stood at RM11.61 as at March 31, 2009, up from RM10.45 three months earlier.

The stock slipped 10 sen to RM11 yesterday. It had touched a 52-week intraday high of RM11.70 on May 13.

PPB is the largest sugar and flour manufacturer in Malaysia. As at the end of last year, the group controlled about 60% and 50% of the local sugar and flour markets, respectively.

Last year, the group recorded an increase of 6.1% in domestic sugar sales, while exports fell 62.2% to 78,475 tonnes from 207,664 tonnes. Around 89% of the sugar it produced was sold locally, as exports declined to 11% from 27% previously.

Last month PPB unit Hexarich Sdn Bhd disposed of its entire holding of 32.42 million shares or 8.39% stake in REDtone International Bhd at 22 sen apiece for RM7.13 million cash.

In March, PPB chairman Datuk Oh Siew Nam said the group expected a fall of 10%-20% in demand for its products, including sugar and flour, as the economic downturn eroded consumer sentiment.