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Thai Beverage Public Company Limited’s Latest Earnings: An Overview Of The Beer 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.

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In a previous article, I had discussed the Spirits segment. In this article, I will be running through the Beer segment, which accounted for 36.7% of Thai Beverage’s total revenue in the second quarter of FY2018, and 16.2% of total net profit. [Editor’s note: Articles studying the Food and Non-Alcoholic Beverages 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.

The financial performance

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

Source: Thai Beverage earnings presentation

We can see that the Beer segment delivered a mixed performance in the reporting quarter. Revenue and EBITDA (earnings before interest, taxes, depreciation, and amortisation) were up on a year-on-year basis. Yet, profit attributable to shareholders fell 66.7% year-on-year.

The spike in revenue was due to the consolidation of Sabeco’s financials into Thai Beverage’s; Sabeco was acquired last year. Sales volume (including Sabeco) grew 153.3% year-on-year. However, sales volume of the existing beer business fell 10.3% year-on-year due to a stagnant economy and low consumer purchasing power. In addition, EBITDA came in higher mainly due to the increase in revenue.

Yet, profit attributable to shareholder fell 66.7% year-on-year mainly due to an increase in finance cost (acquisition related) and the decrease in net profit from the existing beer business.

In sum, Thai Beverage grew its Beer business mainly through its recent acquisition of Sabeco. Excluding Sabeco, its existing business’ performance actually fell on a year-on-year basis.

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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.