Petra Foods FY14 net profit slid 15.2% YoY

Due to flat revenue.

Overall results this year have not been stellar by Petra’s own lofty standards due to IDR weakness and conscious business changes.

However, analysts at OSK-DMG believe that Petra remains on a solid path to benefit from its long-term growth in Indonesia and the Philippines.

Petra Foods’ recurring net profit for FY14 was at USD50.3m, declining 15.2% YoY on flat revenue. The decline was attributable to the translational impact as well as its USD cost base (60% of COGS). In constant currency terms, revenue would have grown 10.7% YoY. It has proposed a dividend of 3.56 US cents/share (1.64 US cents as special dividend).

OSK-DMG says that even in constant currency terms, Petra’s revenue growth for 2014 was below its historical target of 15%.

However, analysts believe this is largely a strategic move to pare down contributions from agency brands, as: i) modern trade shelf space becomes increasingly valuable for Petra, especially if there are competing products, and ii) mature markets like Singapore and Malaysia, take up company resources. They believe this exercise over the past 12 months has put the company into a more stable position.

At this moment, Indonesia accounts for 70% of revenue and most of its profitability. Analysts believe its operations in the Philippines will become exponentially more profitable as sales volume in that market scales up over the next 2-3 years. At this moment, Petra is concentrating mainly on building its market share (currently >10%) in the Philippines.