Petra Foods reported a weaker set of results for FY14, which was expected by the street as the group‟s topline remained hindered by the weakening IDR against its USD reporting currency. FY14 revenue was down 0.9% to US$504.0m and PATMI declined 17.8% to US$48.8m. Excluding the exceptional cost of US$1.5m from the on-going dispute with Barry Callebaut, its core PATMI fell 15.2% to an estimated US$50.3m, which was slightly lower than our forecast. In constant currency terms, FY14 revenue rose 10.7% while PATMI saw a marginal 0.6% increase.

The group managed to maintain its gross profit margin at previous levels of ~32%, despite higher costs of inflation caused by weak regional currencies. A final dividend of 2.58 S-cents with a special dividend of 2.19 S-cents were declared, bringing total DPS to 7.5 S-cents. Pending more information from an analyst briefing later, we are keeping our HOLD rating while our fair value estimate of S$3.86 is under review.

Source: OCBC Research - 26 Feb 2015