Petra Foods braces for loss in FY14 on back of steady rupiah depreciation

The street is expecting a 14% loss this year.

Petra Foods is expected to book a 14% year-on-year loss in FY14, as the rupiah's weakness continues to offset sales growth.

According to OCBC, the street is currently expecting a marginal drop YoY for its FY14 revenue as well
as a 14% loss YoY for FY14 PATMI.

"Notably, in constant currency terms, sales have been achieving double-digit growth rates and we
think the underlying business should continue to perform well," stated OCBC.

Here's more from OCBC:

While the group will likely see a dip in margins for FY14, we believe in the group's focus on margins improvement.

Besides pricing adjustments and product rightsizing initiatives, we keep in mind that Petra Foods is still in their five year deal with Barry Callebaut, wherein they are able to lock up 70% of their raw materials' requirements such as cocoa, milk and sugar.

Barry Callebaut supposedly has to match the lowest viable price sourced by Petra Foods and this should naturally help stabilize its gross profit margin (FY13: 30%) until 2018. The group had also removed agency brands that were cumbersome and adverse to overall profitability.

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