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

Last week, Thai Beverage Public Company Limited (SGX: Y92) released its second quarter earnings update for its fiscal year ending 30 September 2018.

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 51.1% of Thai Beverage’s total revenue in the second quarter of FY2018, and 85.8% of total net profit. [Editor’s note: Articles studying the Beer, Food, and Non-Alcoholic Beverages segments have been published. They can be found here, here, 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.

In 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 second quarter of FY2018:

Source: Thai Beverage earnings presentation

We can see that the Spirits segment did well in the reporting quarter. Revenue, EBITDA (earnings before interest, taxes, depreciation, and amortisation) and net profit grew on a year-on-year basis.

The segment’s top-line grew mainly due an increase in sales volume of existing business and the consolidation of its newly acquired subsidiary in Myanmar. The former accounted for 0.7% growth in sales volume whilst the latter accounted for 17.7% increase in sales volume.

However, on a slight negative note, the segment’s margin fell mainly due to higher advertising and promotion expenses, and 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.