Recently, Thai Beverage Public Company Limited (SGX: Y92) released its third quarter earnings update for its fiscal year ending 30 September 2018 (FY2018).
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 41% of Thai Beverage’s total revenue in the third quarter of FY2018, and 60% of total net profit.
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 third quarter of FY2018:
Source: Thai Beverage earnings presentation
We can see that the Spirits segment performed negatively in the reporting quarter. Revenue, EBITDA (earnings before interest, taxes, depreciation, and amortisation) and net profit declined on a year-on-year basis.
The segment’s top-line declined mainly due a decline in sales volume. In addition, the increase in operating expenses due to advertising and promotion expenses, as well as personnel expenses during the quarter resulted in net profit dropping more than revenue.
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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.