Thai Beverage Public Company Limited’s Latest Earnings

Thai Beverage Public Company Limited  (SGX: Y92) reported its earnings for the year ended 31 December 2015 on Saturday.

As a brief background for some context later, Thai Beverage is a food and beverage (F&B) purveyor based in Thailand. The company, which may be best known as the brewer of Chang beer, has four major business segments, namely Spirits, Beer, Non-alcoholic Beverages, and Food. Geographically, the company operates mainly out of Thailand.

You can catch up with the results from Thai Beverage’s last quarter here.

Financial highlights

The following’s a quick summary of Thai Beverage’s latest financial figures:

  1. Revenue for 2015 was THB 172 billion, up 6% compared to 2014.
  2. Profit attributable to shareholders was up 22%. For 2015, Thai Beverage recorded a profit of THB 26 billion compared to THB 21.7 billion the year before. Majority of the growth came from one-off gains in other income and share of profit in the sale of interest in an associate.
  3. Consequently, Thai Beverage’s earnings per share (EPS) for 2015 saw a matching 22% increase from THB 0.86 in 2014 to THB 1.05 in 2015.
  4. Cash flow from operations came in at THB 22.5 billion with capital expenditure clocking in at THB 4.1 billion. This puts the F&B outfit in positive free cash flow territory to the tune of THB 18.4 billion. In 2014, Thai Beverage had free cash flow of THB 19.6 billion (THB 24.4 billion in cash flow from operations and THB 4.8 billion in capex).
  5. As of 31 December 2015, Thai Beverage had THB 3.5 billion in cash and equivalents and borrowings of THB 44.3 billion. This is an improvement from a year ago when the company had THB 2.2 billion in cash and equivalents and borrowings of THB 49.5 billion.

In summary, Thai Beverage had ended 2015 with a higher top-line and its profit was boosted by one-off items. Meanwhile, the F&B outfit had generated good free cash flow as well.

The board of directors had proposed a final dividend per share of THB 0.46 for a total dividend payout of THB 0.61 for the full year (the interim dividend per share was THB 0.15). This was unchanged from the year before.

Operational highlights

Thai Beverage’s sales in the Spirits segment was relatively unchanged, ending 2015 with THB 105 billion, up just 1.3% from the previous year. The segment is responsible for the lion’s share of the company’s net profit, providing THB 20.2 billion in net profit for the full year, a slight 0.7% dip from 2014.

Meanwhile, the Beer segment enjoyed a 22.5% spike in revenue to THB 43.1 billion in 2015. The segment’s top-line had benefited from an increase in sales volume and sales price. Net profit came in at THB 1.2 billion for the period, more than triple the selfsame figure of THB 396 million in 2014. The profit growth came largely from a higher gross profit margin and lower fixed costs.

Non-alcoholic Beverage sales was up by 4.5% in 2015, ending with THB 16.5 billion. The segment, though, recorded a loss of THB 1.8 billion. Elsewhere, the Food segment recorded revenue and profit of THB 6.6 billion and THB 57 million, respectively, in 2015. The segment remains a small piece in the overall pie for Thai Beverage.

One of the one-off items which posted Thai Beverage’s bottom-line in 2015 was the sale of Fraser and Leave Limited’s (SGX: F99) stake in Myanmar Brewery Limited. The sale had netted Thai Beverage a one-off gain of THB 3.8 billion for 2015. For context, Thai Beverage has a 29% stake in Fraser and Neave.

Thai Beverage had added the following commentary in the earnings release regarding its performance in 2015 and on the factors which may have a bearing on its business in the future:

“The Thai economy in 2015 grew at 2.8% when compared to the previous year. The main supporting factors were from the continuing growth of public investment, the accelerate government budget disbursement and the economic stimulus package. Moreover, the rise in number of international tourists continuously supported the growth of economy. The private consumption and investment also recovered gradually from previous year due to lower oil price and inflation rate.

However, the negative factors were a slowdown of world economy, especially the main trading partners of Thailand such as China, caused the exports of goods to grow at a lower rate, the drought and the drop in agricultural prices caused lower farm income and a slowdown of household spending.

The beverage market in Thailand in 2015 was affected by an increase in tax on alcoholic beverages collected for the National Sports Development Fund, resulting in higher alcohol product prices. In addition, the decline in purchasing power and high household debt caused the consumers to be more cautious about their spending and reduce on-premise consumption, which was challenging to alcohol business.

On the non-alcoholic beverages front, the industry had to deal with fierce competition within the sector on both pricing and promotion. However, even under aforementioned difficult economic environment, we are still able to drive our business growth both in terms of sales and profitability in 2015.”

On a separate note, Thai Beverage is planning to change its fiscal year end from 31 December to 30 September. This would mean that the next fiscal year 2016 will have nine months in order to facilitate the change.

Foolish take away

At its closing price of S$0.69 last Friday, Thai Beverage had a trailing price to earnings ratio of 17 and a trailing dividend yield of 3.4%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.