Petra Foods to double business by 2016

All eyes now on its branded consumer business.

Nomura hosted the management of Petra Foods at Nomura’s ASEAN All Access conference. According to Nomura, Petra Foods eyes good growth prospects for its consumer brand business.

Nomura also adds, Petra believes it can double its business organically by 2016 with its strong competency in branding development.

Here's more:

Divestment of cocoa business will enable group to focus on branded consumer business. Petra announced the divestment of its cocoa business to Barry Callebaut last December for US$950mn.

The proceeds will be used to retire debt with the residual cash of US$250mn to be used to grow the branded consumer business and future acquisitions. Management will also consider distributing part of the proceeds as dividends over several tranches.

The divestment is scheduled for completion by the middle of this year.

Good growth prospects for its branded consumer business. Management sees good growth for its branded consumer business, especially in Indonesia and the Philippines. The combined market size of both markets for chocolates is estimated at US$900mn.

With its strong competencies in branding development, distribution and manufacturing, Petra believes it can double its business organically by 2016.

Near-term margins to be maintained. Petra has locked in the cost of its chocolate ingredients until 1H14 and expects its margins for the branded consumer business to be maintained in 2013. However if the Rupiah weakens considerably, it will need to manage this through price adjustments and cost management.

The group has also negotiated a five-year supply agreement with Barry Callebaut to ensure the availability of supply subject to quality and price considerations.

M&A in snacks, candies and chocolates The group is on the lookout for suitable acquisition targets in the snacks, candies and chocolate segments that can leverage its strong distribution network in Indonesia and the Philippines

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