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Here’s How Thai Beverage Public Company Limited’s Beer Business Performed In Its Latest Fiscal Year

Thai Beverage Public Company Limited (SGX: Y92) is a food & beverages company with four different business segments, namely, Spirits, Beer, Food, and Non-Alcoholic Beverages. The company is based in Thailand, and the country is also its key geographical market.

In late November, Thai Beverage reported its full year results for its fiscal year ended 30 September 2017 (FY2017).

Given that Thai Beverage has a number of business segments, I thought it will be useful to look at the performance of the company’s important business segments. In here, the focus is on the Beer segment, which accounted for 30.2% of Thai Beverage’s total revenue in FY2017, and 13.7% of total net profit.

What the Beer segment does

The Beer segment is engaged in the production and sales of branded beer products. There are three main brands under the segment, which are Chang Beer, Archa Beer, and Federbrau Beer.

The business performance in FY2017

The table below shows a condensed income statement for the Beer segment in FY2017:


Source: Thai Beverage FY2017 full year earnings presentation

We can see that the Beer segment did not have a good year in FY2017.

Revenue declined by 4.7%, mainly because of a decline in sales volume (down 6.8%). Yet, the Beer segment’s gross profit managed to improve by 6.4% due to lower bottling and raw material costs.

Despite higher gross profit, the segment’s EBITDA (earnings before interest, taxes, depreciation and amortization) slipped by 2% on the back of higher advertising and promotion expenses. This eventually resulted in a 4.1% fall in net profit.

One positive point from the Beer segment’s latest results is that its EBITDA and net profit margins were both higher compared to a year ago.

In sum, FY2017 was a challenging year for Thai Beverage’s Beer segment. The company said that the performance was driven mainly by “the continued effects of the mourning period [for the passing of Thailand’s King Bhumibol Adulyadej in October 2016], economic situation, and less consumer’s [sic] purchasing power.” On a slightly positive note, the company managed to control its production costs which resulted in higher gross profit, and better EBITDA and net profit margins.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.