Thai Beverage Public Company Limited’s Latest Earnings: An Overview Of The Beer 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 a previous article, I had discussed the Spirits segment. In this article, I will be running through the Beer segment, which accounted for 31.7% of Thai Beverage’s total revenue in the first quarter of FY2018, and 18.5% of total net profit. [Editor’s note: Articles studying the Non-Alcoholic Beverages and Food segments have been published. They can be found here and here.] 

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 financial performance

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

Source: Thai Beverage FY2018 first quarter earnings presentation

We can see that the Beer 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 were all down on a year-on-year basis.

The segment’s top-line declined mainly due to lower sales volume (down 6.2% year-on-year). It appears that Thailand’s economy has yet to fully recover even after the official mourning period for King Bhumibol Adulyadej’s passing in October 2016 had ended. Meanwhile, EBITDA and net profit both fell hard because of lower revenue, higher packaging costs, higher advertising and promotional expenses, and an increase in staff costs.

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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.