Petra Foods proposes distribution of 9.82 US cents from excess cash despite earnings drop

SINGAPORE - Chocolate confectionery company Petra Foods posted a massive 93.5 per cent drop in fourth-quarter earnings on Monday amid the slower Indonesian economy.

But the company is set to pay shareholders a distribution of 9.82 US cents per share from its excess cash.

Net profit came in at US$800,000 ($1.12m) for the three months to Dec 31, down from the US$12.4 million in the same period a year ago. Revenue dropped 23.8 per cent to US$100 million.

For the full year, the group logged a net loss of US$4.7 million, compared with the net profit of US$48.8 million previously, as it incurred a US$20.1 million for exceptional items mostly related to a US$19.4 million one-time charge following the settlement of a dispute.

Revenue slid 19.5 per cent to US$405.9 million.

The group attributed the "disappointing results" to several factors, citing the slowdown in Indonesia's economy, the higher inflationary environment and the continued weakening of the Indonesian rupiah.

Other influencing aspects included the need for increased spending on advertising and promotion, declines in the gross profit margin during the full year, the closure of its distribution business in Singapore, an increase in its effective tax rate, as well as a one-time exceptional charge arising from the settlement of the dispute with Barry Callebaut.

Earnings per share for the quarter, including exceptional items, slumped 93.5 per cent to 0.13 US cents from the 2.02 US cents previously. Net asset value per share stood at 39.6 US cents as at Dec 31, down from the 48.6 US cents as at the same time the year before.

The company said it no longer has to provide for Barry Callebaut's claim arising from the sale of its cocoa ingredients business, which was finalised last year and allowed the group to reassess its cash requirements.

The board has concluded that the company's US$111.7 million cash reserves are "in excess of the medium term needs of the company" and are proposing to return US$60 million to shareholders by means of a capital reduction.

Petra Foods shares closed 16 cents or 7.2 per cent up at $2.39 on Monday, before the results were released.