Petra Foods profits slump as Indonesian consumers cutback on chocolate

By Oliver Nieburg contact

- Last updated on GMT

Related tags: Petra foods, Indonesia, Southeast asia

Economic slowdown in Indonesia prompts 12.7% revenue decline for Petra Foods Group
Economic slowdown in Indonesia prompts 12.7% revenue decline for Petra Foods Group
SilverQueen and Delfi brand owner Petra Foods has reported a 40% net profit dip in Q2 2015 as sales fall in its main market Indonesia.

The Singapore-based firm is the market leader in chocolate confectionery in Indonesia with more than a 50% share, but revenues in the market plummeted 15.7% in the second quarter (Q2).

Cautious consumers

“With a slowing economy and fears of further contraction, Indonesian consumers have become more cautious with their spending and this has affected demand across most categories of consumer goods including chocolate confectionery,”​ said Petra Foods CEO John Chuang.

“Our trade partners have reduced their inventory in response to the slower consumption and this had a negative effect on our sales,”​ he said.

Price increases

The Petra Foods Group, which also operates in Philippines, Malaysia and Singapore, posted a 12.7% decline in Q2 revenues to $115.1m, while net profit for the period dropped 39.9% to $7.4m.

The company recently upped prices and downsized selected products in Indonesia in response to higher raw material and packaging costs, aggravated by a weak Indonesian Rupiah against the U.S. dollar.

But Chaung hinted at a turnaround in Indonesia: “…We have been monitoring product movement in Indonesia very closely and based on shelf space data, we noted that consumer demand for our major brands remains positive.”

Petra Foods Brands own brands delfi
Petra Foods manufactures its branded consumer goods in two factories located in Indonesia and the Philippines.

Committed to Singapore

Petra Foods did enjoy some success in in the Philippines driven by product launches. Chaung also reitarted Petra Foods’ commitment to the Singaporean market after the firm announced in June it would cease its distribution business in the country.

“Our decision to exit the distribution business in Singapore does not detract from our objective to grow the presence of our Own Brands of chocolate confectionery in the Singapore market which will be achieved through the appointment of a distributor,”​ he said.

Petra Foods is still in arbitration talks with Barry Callebaut over a price dispute for its $762-$860m cocoa ingredients business that was divested in June 2013. Petra Foods says it will provide an update in due course.

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