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The Good And Bad That Investors Should Know About Thai Beverage Public Company Limited’s Latest Quarterly Earnings

In mid-May, Thai Beverage Public Company Limited (SGX: Y92) reported its second quarter earnings for the financial 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.

There are both positive and negative takeaways that investors may want to learn about from its latest earnings. But first, let’s run through the company’s numbers.

The results

Here’s a condensed income statement from Thai Beverage for the second quarter of FY18:

Source: Thai Beverage’s earnings presentation

We can see that Thai Beverage delivered a mixed performance in the quarter. The company’s revenue, EBITDA (earnings before interest, taxes, depreciation, and amortisation) and net profit grew on a year-on-year basis. However, profit attributable to shareholders declined by 3.2% year-on-year.

The positives

Firstly, the Spirits, Beer and Food segments saw their revenues grow year-on-year by 14.3%, 74.4% and 107.7%% respectively in the reporting quarter. All three segments saw higher revenue mainly due to the consolidation of newly acquired subsidiaries.

Secondly, sales volume increased in all the segments. Notably, Spirits and Beer segments recorded 17.7% and 153.3% increase in volume, respectively, as compared to previous year.

Thirdly, EBITDA margin (before recognition of fair value gain) improved from 17.6% for the same period last year to 18.4%. Similarly, net profit margin was up from 11.0% last year to 13.1% in the latest quarter.

The negatives

Firstly, Thai Beverage’s Beer business saw its profit attributable to shareholders fall 66.7% year-on-year, despite the increase in revenue. The fall was mainly due an increase in finance cost related to acquisition and weaker performance from its existing beer business. Sales volume of the existing beer business fell 10.3% year-on-year due to stagnant economy and lower consumer purchasing power.

Secondly, the Non-Alcoholic Beverages business remained in the red during the reporting quarter, mainly driven by lower revenue. The decline in revenue was mainly due to a change in sales mix since sales volume actually grew by 1.7% on a year-on-year basis.

Lastly, the company’s balance sheet had weakened significantly as a result of its acquisitions. As at 31 March 2018, the group had cash and cash equivalents of THB 20.4 billion and total borrowings of THB 234.5 billion. This gives a net debt position of THB 214.1 billion, up from the THB 30.7 billion recorded on 30 September 2017.

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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.