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Thai Beverage Public Company Limited’s Latest Earnings: An Overview Of The Spirits Business

In mid February, Thai Beverage Public Company Limited (SGX: Y92) released its first quarter earnings update for its fiscal year ending 30 September 2018 (FY2018). The reporting period was from 1 October 2017 to 31 December 2017.

As a quick introduction, Thai Beverage is a company operating in four different segments, namely, Spirits, Beer, Food, and Non-Alcoholic Beverages. Given that the company has four different businesses, I thought it would be useful to have a look at the performance of the individual segments.

In this article, I will be running through the Spirits segment, which accounted for 54.3% of Thai Beverage’s total revenue in the first quarter of FY2018, and 84.0% of total net profit. [Editor’s note: Articles studying the Beer, Non-Alcoholic Beverages, and Food segments have been published. They can be found herehere and here.]

What the Spirits segment does

The Spirits segment is engaged mainly in the production and sale of spirits products under different brands. The company produces brown spirits, white spirits, and more. Thai Beverage has 18 distilleries that produce these sprits.

On October 2016, Thai Beverage made the decision to transfer its soda water business from its Non-Alcoholic Beverages segment to the Spirits segment. This was made to “recognise that the majority of consumers drink spirits mixed with soda water.”

The financial performance

The table below shows a condensed income statement for the Spirits segment for the first quarter of FY2018:

Source: Thai Beverage FY2018 first quarter earnings presentation

We can see that the Spirits segment did not do well in the reporting quarter. Revenue, EBITDA (earnings before interest, taxes, depreciation, and amortisation), net profit, the EBITDA margin, and the net profit margin all declined on a year-on-year basis.

The segment’s top-line fell mainly due to a change in the product mix. Meanwhile, EBITDA and net profit declined because of the aforementioned shift in the product mix, and higher staff costs and advertising and promotion expenses.

But on a positive note, the segment’s sales volume increased by 0.6% year-on-year.

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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.