SINGAPORE: Chocolate charges melt Petra Foods FY profits

By Chris Mercer | 27 February 2013

FY profits slide by 57% to US$25.9m
Net sales rise by 13.8% to $477.7m
EBITDA up by a third to $84.8m

Petra Foods has seen full-year profits slide by 57% due to difficult trading conditions and one-off charges related to its soon-to-be-sold cocoa ingredients business.

For the 12 months to the end of December, Singapore-based Petra saw net profits were US$25.9m, down 57.2% on the previous year. The group sank to net losses of $16.7m in the fourth-quarter, versus profits of $18.4m in the same period of 2011.

Petra said it took a $27.5m charge connected to the planned divestiture of its cocoa ingredients business.

The unit also continued to come under margin pressure, and sank to net losses of $28.6m for the full-year, from profits of $21.2m a year earlier.

John Chuang, Petra's CEO, said the proposed sale of the cocoa ingredients arm will enable the group focus on its better-performing branded consumer business. It will focus on rising demand for chocolate and confectionery in South East Asia.

A strong showing from Petra's branded and consumer food arm enabled it to increase overall net sales by 13.8% in 2012, to $477.7m. EBITDA rose by almost a third, to $84.8m.

Excluding the cocoa ingredients business, net profits jumped by 38.6%, to $54.5m.

Show the press release

Petra Foods Limited FY 2011 Results

Page 1 of 5

(Registration no. 198403096C)

FOR IMMEDIATE RELEASE

Petra Foods’ reports net profit of

US$25.9 million for FY2012

Strong performance achieved by Branded Consumer Division with net profit higher

38.6% Year-on-Year

Final cash dividend of 1.86 US cents is proposed, lifting total dividend for the year to

3.97 US cents

Financial Highlights

(US$ Million)

4Q ended 31 December

Year ended 31 December

2012

2011

% Change

2012

2011

% Change

BRANDED CONSUMER

Revenue

119.9

101.5

18.1 477.7 419.8

13.8

EBITDA

23.1 19.5

18.3 84.8 63.8

32.9

Net Profit

14.7

13.5

9.1

54.5 39.4

38.6

Net (loss)/profit from to-be

divested Cocoa Ingredients

(31.4) 4.9 NM (28.6) 21.2 NM

Group Net Profit

(16.7) 18.4 NM 25.9 60.6

57.2

Impacted by additional provisions and excepti

onal charges totalling US$27.5 million, net of tax

SINGAPORE

27 February 2013

Petra Foods Limited

(“Petra Foods” or the “Group”),

today announced that the Group achieved net profit attributable to shareholders of US$25.9

million for the full year ended 31 December 2012 (“FY2012”). The Group’s Branded

Consumer Division produced a strong performance as it further strengthened and developed

its presence in all its markets supported by the strong regional consumption. However, the

challenging operating environment for the to-be divested Cocoa Ingredients Division,

especially in margin compression, together with a US$27.5 million charge for additional

provisions and exceptional charges relating to the planned divestiture of the Division led to a

more muted overall result for the Group.

Based on the weighted average number of ordinary shares in issue, earnings per share for

FY2012 decreased to 4.25 US cents while net asset value per share as at 31 December

2012 stood at 53.7 US cents.

Petra Foods Limited FY 2011 Results

Page 2 of 5

(Registration no. 198403096C)

SEGMENTAL REVIEW

Branded Consumer Division

Financial Highlights

(US$ Million)

3 months ended 31 December

12 months ended 31 December

4Q 2012

4Q 2011

% Change

Y-o-Y

FY2012

FY2011

% Change

Y-o-Y

Indonesia

84.6

72.9

16.0 353.3

304.8

15.9

The Regional Markets

35.3

28.6

23.5 124.4

115.0

8.1

Total Branded Consumer

Revenue

119.9

101.5

18.1 477.7

419.8

13.8

Gross Profit Margin (%)

31.5% 32.2%

1.7% pt 31.9% 30.6%

1.3% pt

EBITDA

23.1

19.5

18.3 84.8

63.8

32.9

With its key strategies of strengthening and further developing its presence in all key

markets, the Branded Consumer Division achieved excellent performance in both Indonesia

and the regional markets, resulting in a 13.8% Y-o-Y growth in revenue and a 32.9% Y-o-Y

increase in EBITDA. The key drivers fuelling this growth were the vibrant consumption

environment in the Group’s key markets; strong gains from the 34 new products launched

during FY2012 and also the Group’s expanded distribution network which boosted Own

Brands sales by 16.7% Y-o-Y.

One of the Group’s key markets, Indonesia, registered revenue growth of 15.9% Y-o-Y to

US$353.3 million, principally due to the strong sa

les performance of its premium products in

the Group’s Own Brands segment. Indonesia’s robust consumption demand, coupled with

the Group’s scaled-up distribution efforts and infrastructure, have contributed towards the

growth in Petra Foods’ performance in Indonesia.

The Regional Markets - comprising the Philippines, Malaysia and Singapore - posted 8.1%

Y-o-Y revenue growth to US$124.4 million for FY2012 compared to US$115 million in the

preceding year. The Group’s performance in the Philippines was particularly impressive with

double digit revenue growth due to aggressive new product launches supported by the

expansion of distribution coverage and higher

levels of investments in brand development

programmes.

Petra Foods Limited FY 2011 Results

Page 3 of 5

(Registration no. 198403096C)

Cocoa Ingredients Division (to-be divested)

Financial Highlights

(US$ Million)

3 months ended 31 December

12 months ended 31 December

4Q 2012

4Q 2011

% Change

Y-o-Y

FY 2012

FY 2011

% Change

Y-o-Y

EBITDA

(12.2) 15.8 NM 23.1 65.8

64.9

EBITDA/mt in US$

(180)

242

NM 90

248

63.6

EBITDA/mt in US$

(excluding inventories write-

down and provision)

81 242

66.6 160 248

35.7

Sales volume (mt)

67,942

65,359

4.0 255,872

265,053

3.5

During the course of the year, Petra Foods received several offers to acquire its Cocoa

Ingredients business and it was after a comprehensive evaluation process and long

deliberation period that the Board approved the Conditional Agreement with Barry Callebaut

for the Proposed Divestment of the business. The SPA was signed on 12 December 2012

for total consideration of US$950 million, subject to adjustments at completion.

In arriving at the strategic rationale for the Divestment, the Board of Petra Foods took into

consideration: (1) the significant investments (from a capital as well as human resource

standpoint) required if the Group were to continue growing the business organically; and (2)

the higher returns and lower risks through re-deploying the capital in its Branded Consumer

Division.

For FY2012, EBITDA decreased 64.9% Y-o-Y to US$23.1 million due to the continued

deteriorating negative pressures affecting all global cocoa ingredients suppliers. Also, the

Group is recognising an exceptional charge totalling US$14 million net of tax in this financial

year, owing to the Proposed Divestment of the Division.

Business Prospects

Commenting on the year’s performance, Petra Foods’ Chief Executive Officer, Mr John

Chuang said, “With the proposed divestment of the Cocoa Ingredients business, this will be a

significant change for Petra Foods. We will now be able to focus exclusively on growing our

Branded Consumer business where the combined strengths of our market leading Brands,

product innovation and distribution together with

the growing regional markets will drive the

growth.”

Petra Foods Limited FY 2011 Results

Page 4 of 5

(Registration no. 198403096C)

As the South East Asia remains a fast growing region for chocolate confectionery market

with rising affluence of the young population, the Group’s strategic focus will be on driving

growth and profitability in this region which we already have first-mover advantage. New

product launches and brand building efforts will be key to tapping on these rising

opportunities. Barring any unforeseen circumstances, the Group expects FY2013 to be

another year of growth for the Group’s Branded Consumer Division.

Final Dividend

The directors have proposed a final dividend of 1.86 US cents per share subject to

shareholders’ approval at the Annual General Meeting on 30 April 2013. If approved, the

dividend will be paid on 21 May 2013.

Inclusive of the interim dividend of 2.11 US cents, shareholders would receive a total

dividend of 3.97 US cents in respect of FY2012.

# # #

Petra Foods Limited FY 2011 Results

Page 5 of 5

(Registration no. 198403096C)

ABOUT PETRA FOODS LIMITED

Listed on the SGX-ST since 5 November 2004, Petra

Food Limited and its subsidiaries (“the Group”)

is one of the world’s major manufacturers and suppl

iers for premium cocoa ingredients, namely cocoa

powder, cocoa butter and cocoa liquor. The Group

also manufactures and/or distributes branded

consumer products, primarily chocolate confectioner

y products, for which it is the market leader in

Indonesia.

The Group has two business divisions,

Cocoa Ingredients

and

Branded Consumer.

Cocoa Ingredients Division

The Group manufactures and sells cocoa ingredients, under the “Delfi” brand, to over 30 countries

worldwide. Its major customers are international food and beverage companies such as Nestlé,

Cadbury, the Mars Group, Arnott’s, A.B.

Foods, Barry Callebaut and the Meiji Group.

Branded Consumer Division

The Group manufactures and/or distributes branded consumer products that are sold in over 17

countries including Indonesia, Singapore, Malaysia,

Hong Kong, Australia, Thailand, the Philippines

and China. Petra Foods has an established portfolio

of chocolate confectionery brands which are

household names in Indonesia include 10 master brands and 20 key sub brands and manufactures

over 300 stock keeping units. Its flagship brands

in Indonesia include “SilverQueen” and “Ceres” that

were introduced in the 1950s and “Delfi” in the 1980s. In addition, the Group also distributes a well-

known portfolio of 3

Party brands in Indonesia, Singapore and Malaysia.

Headquartered in Singapore, Petra Foods has seven

cocoa processing facilities (located in Indonesia,

Malaysia, the Philippines, Thailand, Brazil, Mexico

and Germany), one cocoa butter facility (located in

France), two chocolate confectionery production faci

lities (located in Indonesia and the Philippines)

and a total staff strength of close to 6,000.

Petra Foods was awarded the top spot in the annual Singapore Enterprise 50 Award in 2003. In

addition, it was recognised as the "Best Newly Li

sted Singapore Company in 2004" in AsiaMoney's

Best Managed Companies Poll 2004. Petra Foods was named the “Enterprise of the Year 2004” by

the 20

Singapore Business Awards on 30 March 2005

and was named one of “Singapore’s 15 Most

Valuable Brands” in November 2005 by IE Singapore.

Petra Foods won a Silver award fo

r its inaugural annual report in

the “Best Annual Report/Newly

Listed Company” category in 2006 at the Singapore Co

rporate Awards. In April 2009, it clinched a

Gold award in the “Best Annual Report/

Companies with $300 million to

less than $1 billion in market

capitalisation” category. In May 2010, it bagged

two Silver awards for “Best Managed Board” and

“Best Investor Relations” under the “companies with

$300 million to less than $1 billion in market

capitalisation” category. In

Issued on behalf of

Petra Foods Limited

Original source: http://petrafoods.listedcompany.com/newsroom/20130227_013455_P34_056C00B4BD5B78CD48257B1E00602BE4.2.pdf

Sectors: Confectionery, Emerging markets, Financials

Companies: Petra Foods

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