Thai Beverage Public Company Limited’s Latest Earnings: What Investors Should Know

Thai Beverage Public Company Limited  (SGX: Y92) reported its second-quarter earnings yesterday evening. The reporting period was for 1 April 2016 to 30 June 2016.

As a quick background, the food and beverage (F&B) purveyor may be best known as the brewer of Chang beer. Operationally, Thai Beverage’s business can be divided into four major segments, namely Spirits, Beer, Non-alcoholic Beverages, and Food. Geographically, the company operates mainly out of Thailand.

You can catch up with last quarter’s report here.

Financial highlights

The following’s a rundown on some of the latest financial figures for Thai Beverage:

  1. Revenue for the second-quarter was THB 45.45 billion, up 16.6% compared to the same quarter a year ago.
  2. Profit attributable to shareholders was down 1% for the reporting quarter. Thai Beverage recorded a profit of THB 5.9 billion.
  3. For the second-quarter, earnings per share (EPS) was THB 0.23, unchanged from the same period a year ago.
  4. Cash flow from operations came in at THB 13.9 billion with capital expenditure clocking in around THB 1.9 billion. This puts the F&B outfit in positive free cash flow territory, bringing in nearly THB 12 billion, nearly double the THB 6.62 billion seen in the second-quarter of 2015.
  5. As of 30 June 2016, Thai Beverage had THB 2.9 billion in cash and equivalents and borrowings of THB 41.6 billion. This is an improvement from the end of 2015 when the company had THB 3.5 billion in cash and equivalents and borrowings of THB 44.3 billion.

In all, Thai Beverage has brewed up a quarter of revenue growth and positive free cash flow. But, profit growth did not keep up with the sales growth this time around. The firm also carries a fair amount of debt on its balance sheet.

The company’s board of directors recommended an interim dividend of THB 0.20 per share, a nice increase from the THB 0.15 per share paid out a year ago.

Operational highlights

The Spirit segment’s sales was up 0.7%, ending the quarter at THB 24.3 billion. The segment is responsible for the lion’s share of Thai Beverage’s net profits, providing THB 4.68 billion in net profit for the reporting quarter, up 0.9% from a year ago.

Meanwhile, Beer sales soared over 69.4% to THB 14.8 billion for the second-quarter of 2016. Revenue benefited from an increase in sales volume. Net profit spiked by 480% to THB 917 million for the period.

Non-alcoholic beverage sales was also up 3.3% year-on-year, ending with THB 4.6 billion. The segment, though, recorded a loss of THB 217 million, which is better than the THB 608 million loss seen a year ago. Elsewhere, the Food segment recorded THB 1.8 billion in revenue for the reporting quarter.

Thai Beverage added the following commentary on the quarter:

“Thai economy in 2Q 2016 reflected improving signs from previous quarter mainly because of domestic expenditures which were supported from economic stimulus measures and accelerated government expenditures. Private consumption improved as farm income registered a positive growth by 2.2% per year after the drought conditions had alleviated.

In addition, tourism sector continued to expand due to growing number of local and foreign tourists. The number of foreign tourists expanded by 8.2 percent per year. Meanwhile, headline inflation and unemployment rate were low at 0.3 and 1.1 percent, respectively.

The improvement in Thai economic situation and private consumption created positive impacts on overall business, i.e., alcoholic beverages, non-alcoholic beverages, and food business. Moreover, continued development in non-alcoholic beverages business in terms of brand strength and product diversification resulted in an increase in sales.”

As a reminder, Thai Beverage will be changing  its fiscal year end from 31 December to 30 September. The current fiscal year 2016 will end on 30 September 2016, or a period of nine months.

At its closing share price of S$1.03 yesterday, Thai Beverage has a trailing price to earnings ratio of 24.

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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.