Petra Foods full year: Net profits down after disputed Callebaut sale

Petra Foods says after accounting for operating losses of the Barry Callebaut divestment, the group’s net profit was significantly lower than a year ago

Petra Foods reported group net profits down 20.6% from the previous year following the divestment of its cocoa ingredients business to Barry Callebaut, but say own brand sales are up 12.6%.

The Singapore-based firm reported full year net profits of US$59.3 million. “In 2013, the divested Cocoa Ingredients business was impacted by significant headwinds affecting cocoa ingredients suppliers worldwide. Hence, despite the strong performance of the Branded Consumer business, after accounting for operating losses of the divested cocoa ingredients division, the group’s net profit was significantly lower at US$20.6 million compared to a year ago,” the company said.

Meanwhile the company reported strong growth within its own brand division, which contributes 60% of total sales.

Own brand upped

The group’s own brand sales were up 12.6% to US$319m in 2013 financial year. The company said: “The dynamic regional consumption of chocolate confectionery coupled with product innovation (36 new product launched in FY2013), brand building strategies and route-to-market capabilities were key reasons behind the robust sales of Petra Foods own brands.”

The group said that looking forward its premium segment would be a key area for portfolio expansion, saying overall it would be exploring possible mergers and acquisitions as well as strategic alliances in new markets and product categories.

Divestment spat

Last summer Barry Callebaut acquired Petra Foods’ cocoa ingredients business for a price originally agreed at US$860m. Petra Foods accused Barry Callebaut of swerving around US$100m of the payment price a few months later, to which Callebaut said it had every right to do. In the financial report Petra Foods said it still disputed the final post-completion adjustments in accordance with the Sales and Purchase Agreement (SPA) and had filed a notice of arbitration with the Singapore International Arbitration Centre.

Mr John Chuang, Petra Foods CEO, told investors: “Given the challenging environment under the weight of rising cost inflation and volatility in the regional currencies, we are very pleased with the strong showing we have achieved in our financial performance in FY2013. Having successfully divested the cocoa ingredients business earlier in the year, the group has been able to focus on its higher return branded consumer business in the rapidly expanding regional markets. We believe that by focusing our efforts on product innovation, expanding our product distribution network and exploring strategic investment opportunities, we can, barring unforeseen circumstances, sustain the growth momentum of Petra Foods.”

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