FOOD & BEVERAGE | Staff Reporter, Singapore

Forex woes, sluggish demand slam struggling Petra Foods

It’s had to resort to capital reduction measures.

Price hikes are not in the cards anytime soon for Petra Foods, as weak demand pervades its distribution channels.

According to a report by RHB, Petra is barely in the black. Though its Q4 profits were slightly positive, its profit margins are still bearing the weight of the higher USD-denominated cost base. On top of this, there is a risk that the IDR further depreciates against USD.

Petra has also been left reeling by the final settlement of its dispute with Barry Callebaut in August last year. Insufficient capital reserves have now pushed the company to initiate a capital reduction exercise in place of a special dividend.

Meanwhile, Petra ceased its Singapore distribution business right on the heels of it shelving less profitable Indonesia agency brands in early 2015.

RHB believes, though, that this signals an ongoing business restructuring process that would let it focus on its own brands as competition for modern trade shelf space intensifies and internal resource allocation for the marketing dollar becomes more important. 

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