Thai Beverage Public Company Limited’s Latest Earnings: The Brew Goes Flat

Last Friday, Thai Beverage Public Company Limited (SGX: Y92) reported its third quarter earnings for its fiscal year ending 30 September 2017 (FY2017). The reporting period was for 1 April 2017 to 30 June 2017.

As a quick background, Thai Beverage is a distiller of spirits and the the brewer of Chang beer. Thai Beverage’s business can be divided into four major segments: spirits, beer, non-alcoholic beverages, and food.

You can catch the results from the company’s previous quarter here.

Financial highlights

Here’s a rundown on some of the latest financial figures for Thai Beverage’s fiscal third quarter:

1. Revenue was THB 45.3 billion, unchanged from a year ago.

2. Profit attributable to shareholders was up 162% to THB 15.2 billion.

3. Earnings per share (EPS) was THB 0.61, up 165% from a year ago.

4. Cash flow from operations was THB 20 billion and capital expenditure was THB 3.8 billion. The firm generated free cash flow of THB 16.2 billion, down from the THB 22.4 billion seen a year ago (THB 25.3 billion in operating cash flow and THB 3.0 billion in capex).

5. As of 30 June 2017, Thai Beverage had THB 3.9 billion in cash and equivalents and borrowings of THB 42.4 billion.

In the reporting quarter, Thai Beverage’s revenue was flat, but profit was up sharply. The company’s net income benefitted from the recognition of a fair valuation gain on a financial asset of THB 8.5 billion. But without the valuation gain, Thai Beverage’s profit would still have been up 15% year-on-year. The company had generated free cash flow in the quarter, but still carries a good chunk of debt on its balance sheet.

Operational highlights

Spirit sales was up 4.5% year-on-year during the quarter, ending at THB 24.4 billion. The segment provided THB 4.6 billion in net profit, up 2.4%. Meanwhile, beer sales fell 7.1%, to THB 14.8 billion for the reporting quarter. Net profit from the beer segment was sliced 33.9% to THB 917 million for the period.

Revenue from the non-alcoholic beverage segment was also down 4.1% year-on-year to THB 4.3 billion in the fiscal third quarter. The segment recorded a narrower loss of THB 174 million, compared to the loss of THB 215 million a year ago. Elsewhere, the food segment recorded THB 1.8 billion in revenue (down 2.3% from a year ago) andd THB 29 million in profit (up 10.3%).

In its earnings release, Thai Beverage shared the following statements which gave some colour on the conditions of its markets:

“Thai economy during April – June 2017 continued to expand. The main growth drivers were improvement in merchandise exports and tourism sector. However, an anxiety over high cost of living and product price remained at top level.

Moreover, low agricultural prices, especially rubber and cassava prices, resulted in weak purchasing power of low income households. On the stability front, headline inflation was 0.1% per year, decreased from the last quarter as price of fresh foods declined from more product supply into the market, and high base effect from last year’s drought.

On private consumption side, even though price of some agricultural products have increased, but it did not show a positive impact on purchasing power of agriculturist.

For example, farmers in the northeast and northern part of Thailand still faced a problem of low rice price because of high-moisture paddy; as a result, purchasing power of this group remained low. Moreover, mourning period effect still partially affected some of our business groups as ontrade consumption has not been fully recovered.”

At its closing stock price of S$0.93 on Friday, Thai Beverage had a trailing price to earnings ratio of 16.9 and a 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.