Thai Beverage reports fiscal full-year net profit fell 40 percent despite revenue rise

Cans of Chang beer at a Singapore supermarket; taken September 2018. The Chang brand is owned, brewed and distributed by Thai Beverage.Cans of Chang beer at a Singapore supermarket; taken September 2018. The Chang brand is owned, brewed and distributed by Thai Beverage.

Thai Beverage reported on Monday that its fiscal full-year net profit dropped 40.2 percent on-year to 20.73 billion Thai baht amid lower profit contributions from the spirits and beer businesses and a wider loss in the non-alcoholic beverage business.

It also pointed to expenses related to a business acquisition and a Sabeco-related finance cost.

ThaiBev said that despite improvement in the Thai economy and recovering earnings among some low-income households, that hasn’t translated into a consumption boost.

“Household debts remain at high levels and households have been earmarking a portion of their income for repaying debts,” the company said, adding that a new elderly fund tax and higher product prices after an excise tax increase at end-2017 has hurt consumer purchasing power.

Revenue for the fiscal year ended 30 September rose 21 percent on-year to 229.70 billion baht amid higher sales in the beer business and food business, although that was partly offset by a decline in sales in the spirits business and the non-alcoholic beverages business, it said in a filing to SGX after the market close on Monday.

Distribution costs climbed 42 percent on-year for the full year to 26.31 billion baht, administrative expenses rose 27 percent on-year to 15.29 billion baht and finance costs surged 406 percent to 4.96 billion baht, it said.

Costs related to business acquisition was 2.46 billion baht for the full year, it said.

ThaiBev declared a total annual dividend of 0.39 baht a share, which less the interim dividend of 0.15 baht, leaves a remaining dividend of 0.24 baht with a payable date of 28 February 2019. In the previous fiscal year, ThaiBev declared a total dividend of 0.67 baht a share.

Spirits business

In the spirits business, revenue fell 3.1 percent on-year for the fiscal year to 105.9 billion baht, while the unit’s net profit fell 13.2 percent on-year to 17.72 billion baht on the lower revenue and an increase in advertising, promotion expenses and staff costs, ThaiBev said.

It added that higher agent sales ahead of the 16 September 2017 start of an excise tax hike created a high comparison base for the fiscal year.

Beer business

In the beer business, sales revenue rose 64.8 percent on-year for the year to 94.49 billion baht, while net profit for the unit fell 10.4 percent to 2.81 billion baht on increased finance costs, despite an increase in gross profit, ThaiBev said. It also pointed to higher advertising, promotion and personnel expenses.

“The lower domestic purchasing power presented the beer industry with challenges this year,” the company said.

Non-alcoholic beverages

In the non-alcoholic beverage business, revenue fell 3.5 percent on-year for the year to 16.18 billion baht, mainly due to product mix, while it posted a net loss of 1.24 billion baht, wider than the year-ago 389 million baht loss, mainly on lower revenue, it said.

ThaiBev said sales volume decreased for ready-to-drink tea, Jubjai, 100Plus and Lipton, although drinking water and carbonated soft drinks saw a sales volume increase.

The fire incident on the UHT ready-to-drink tea production line was fully covered by property and business-interruption insurance, it said.

Food business

In the food business, revenue rose 96.8 percent on-year for the full fiscal year to 13.27 billion baht, while net profit jumped 432.7 percent on-year to 554 million baht on the sales increase, ThaiBev said.

The improvement in the food business was driven by the acquisition of 252 existing KFC stores in Thailand by ThaiBev’s wholly owned subsidiary, QSR of Asia, or QSA, at the beginning of December 2017, it said.

 

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