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‘Weak global chocolate consumption’ hurts Petra Foods

By Oliver Nieburg+

08-Nov-2012

Singapore-based Petra Foods has posted sales and profit declines in the third quarter (Q3) as it complained of weak global demand for chocolate that halved profits in its cocoa ingredients division.

Petra Foods supplies cocoa ingredients to major confectioners such as Nestlé, Kraft/Cadbury and Mars through its Delfi brand. It also produces its own chocolate for markets in Asia-Pacific under brands such as SilverQueen, Ceres and Delfi.

Margin compression

The company’s overall EBITDA for Q3 was down 7.4% on the same period last year to US $28.7m and sales were down 16.5% to $359.9m as the cocoa ingredients division tumbled.

“The global cocoa ingredients industry is facing significant headwinds in the form of margin compression, especially in the generic segment, as a result of an excess capacity/supply situation at a time of weaker chocolate consumption globally” said the company in a statement.

Europe’s Q3 cocoa grind was the lowest in seven years as the North American grind fell 2% and the Asian grind was flat.

Petra supplies cocoa ingredients to leading confectioners such as Mars

Barry Callebaut is another major cocoa ingredients supplier to feel the pinch as its operating profit fell 2.5% during the quarter to CHF 353m ($376m), it announced yesterday.

Petra Foods profits in its larger cocoa ingredients segment fell 57.8% to $6.7m.

The company plans to focus on higher marginized custom ingredients and will move away markets such as Eastern Europe to attempt to restore profitability.

Consumer goods promise in Malaysia & Philippines

Petra’s branded consumer goods division had a far more positive Q3 with profits up 44.9% to $22m.

CEO John Chuang said: “The consumption environment in our regional markets, particularly Indonesia and the Philippines, is expected to remain vibrant, thanks to strong regional economies and fast-growing middle income populations.

“We will continue to tap these growth opportunities by extending the market reach of our Branded Consumer products through our brand-building efforts, new product offerings, as well as diversification into new product categories.”

Petra Foods' own brands include SilverQueen and Delfi

We will also expand our regional distribution network to support our growth in these markets.”

However, the firm hopes to mitigate the problem by seizing on growth in the developing Asian market.The company said chocolate consumption in developed markets will continue to be weak due to economic fragility in Europe and the US.