Petra Foods’ cocoa arm tumbles on ‘weak’ chocolate demand as own products profit

By Oliver Nieburg contact

- Last updated on GMT

Related tags: Chocolate, Developed country, Philippines, Petra foods, Indonesia

Petra Foods’ cocoa arm tumbles on ‘weak’ chocolate demand as own products profit
Singapore-based Petra Foods’ cocoa ingredients business had nosedived in its second quarter (Q2) results due to weakening chocolate demand in developed markets.

However, its overall profit was sustained by its branded consumer goods division, which profited from rising consumption in developing markets such as Indonesia and the Philippines.

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.

Results roundup

The company’s overall EBITDA for the second quarter (Q2) was up 3.1% on the same period last year  to US $33.8m due to gains in its own branded chocolate.

However, the firm’s total sales took a 12.6% hit to $377.9 as its larger cocoa ingredients business suffered from weakening customer demand for chocolate products in Europe and the US.

Cocoa takes a tumble

“The industry and market is facing significant headwinds in the form of pricing pressure as a result of global excess capacity compared to global demand,”​ said the company in its release.

Petra Foods supplies cocoa ingredients to leading confectioners from plants in Asia, Europe and the Americas
Petra Foods supplies cocoa ingredients to leading confectioners from plants in Asia, Europe and the Americas

It pointed the finger at the fragile global economy, particularly in Europe and the US.

“With these challenges in play, global chocolate consumption in developed markets is expected to be weak,”​ continued Petra.

The company’s cocoa ingredients division has already felt the impact in Q2. Sales were down 21.8% to $253.5m and EBITA plummeted 31.4% to $12.3m. Volumes also decreased around 10% to 58,744 metric tonnes.

Branded goods on the rise

However, the picture was much rosier for Petra Foods in its smaller branded consumer division.

“Contrastingly, the consumption trend in developing markets such as Indonesia and the Philippines continues to be vibrant and robust – boosted by their strong economies and fast growing middle-income populations,”​ said the firm.

Petra Foods Brands own brands delfi
Petra Foods produces its own brands for Asia-Pacific through two confectionery facilities, one in Indonesia and one in the Philippines

Consequently, division sales in Petra’s consumer brands business grew around 15% to $377.9m and EBITA rose an astounding 44.7% to $21.6m.

Growth was strongest for the company’s own brands in Indonesia and the Philippines. Results were also helped by 40 new product launches in the last 12 months.

The company expects its branded consumer division to grow on the strength of higher chocolate demand in Asia, while tougher times are ahead for its cocoa ingredients arm in the face of weakening consumption in developed markets.

Related topics: Ingredients, Chocolate, Cocoa & Sugar

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