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Thai Beverage Public Company Limited’s Latest Earnings: A Stale Quarter

Last Thursday, Thai Beverage Public Company Limited  (SGX: Y92) reported its second quarter earnings report for its fiscal year ending 30 September 2017 (FY2017). The reporting period was for 1 January 2017 to 31 March 2017.

As a quick background, Thai Beverage is a food & beverages company. Its business is divided into four major segments: Spirits; Beer; Non-alcoholic Beverages; and Food. The first two segments make up the lion’s share of Thai Beverage’s business.

Financial highlights

The following’s a rundown on some of the company’s latest financial figures:

1. Revenue for the fiscal second quarter was THB 50.3 billion, down 9% year-on-year.

2. Profit attributable to shareholders for the reporting quarter was down 23% to THB 6.6 billion.

3. Consequently, earnings per share (EPS) was THB 0.26, down 24% from a year ago.

4. Cash flow from operations for the first half of FY2017 was 14.4 billion and capital expenditure was THB 2.8 billion. The firm generated free cash flow of THB 11.6 billion, down 38% from THB 18.6 billion a year ago.

5. As of 31 March 2017, Thai Beverage had THB 2.5 billion in cash and equivalents and borrowings of THB 41.1 billion.

In all, Thai Beverage’s brew is looking a little stale for the second quarter of FY2017 as there were declines in revenue and profit. But, Thai Beverage had generated free cash flow, albeit lower than a year ago. The firm still carries a fair amount of debt on its balance sheet.

The board of directors recommended an interim dividend of THB 0.20 per share, unchanged from the interim dividend a year ago.

Operational highlights

Revenue from the Spirits segment was down 7.5%, ending the reporting quarter with THB 31.2 billion. The segment also provided THB 6.2 billion in net profit, down 10.9% from a year ago.

Meanwhile, the Beer segment saw its revenue fall 13.9% to THB 18.0 billion. Net profit was also sliced 43.5% to THB 1.6 billion for the period.

Non-alcoholic beverage sales slipped by 3.2% year-on-year for the quarter, ending with THB 4.4 billion. The segment recorded a loss of THB 199 million, which is lower than the loss of THB 272 million a year ago. Elsewhere, the Food segment recorded THB 1.5 billion in sales for the reporting quarter, up 7.3% from a year ago. But, the segment’s profit was down 7.9% to THB 38 million.

Here’re Thai Beverage’s comments about its market conditions for the reporting quarter:

“Thai economy during January – March 2017 continued to expand from the previous quarter, driven by the expansion of export sector. The tourism sector and agricultural income improved.

However, a recovery in farm income exhibited only in specific products and specific areas, and a purchasing power of the middle to low income remained weak. Although public spending continued to be a driver of the economy; however, it started to show some slowdown after the spending was accelerated in previous quarter. On the stability front, headline inflation increased from the last quarter following rising domestic petroleum price.

Nevertheless, the postponement of economic activities during the 100 days of mourning period, which lasted until late January 2017, partially affected our business since on-trade consumption still decelerated.

In addition, private consumption was weakened after the government’s short term stimulus packages to boost economic growth during the end of last year was terminated.”

At its closing stock price of S$0.885 last Friday, Thai Beverage had a trailing price to earnings ratio of 59 and dividend yield of 2.7%.

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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.