Petra 'petra-fied' by looming loss on cocoa division

No thanks to US$13.5m provisions.

According to DBS, Petra revealed it expects to book a loss on its Cocoa Ingredients (CI) division due to provisions of US$13.5m and exceptional charges of US$14m. 

For accounting reasons, these charges need to be recognised in FY12, even though its proposed disposal of the CI division to Barry Callebaut for US$950m is only expected to complete by end 1H13.

Here's more from DBS:

No impact on proposed disposal to Barry Callebaut. We have trimmed FY12F earnings by c.39% to factor in these exceptional items, but have kept FY13F/14F intact.

The group has stated that this will not affect the proposed disposal announced in Dec12, and both parties are committed to completing the transaction by the target date.

We have previously factored in a deteriorating outlook for the CI business with a lower EBITDA/mt margin in FY13F. In fact, the disposal could signal a timely exit by Petra, given the near term challenges ahead, allowing the company to focus on the Branded Consumer (BC) business.