ThaiBev Q1 profit rises 0.5% to 8.47b baht

THAI Beverage (ThaiBev) on Thursday announced a net profit of 8.47 billion baht (S$376 million) for its first quarter ended Dec 31, up 0.5 per cent from 8.42 billion baht for the year-ago period.

The growth in net profit was largely due to increased net profit from ThaiBev's spirits, beer and non-alcoholic beverages businesses which more than offset lower contributions from its food businesses and stakes in Frasers and Neave (F&N) and Frasers Property Limited.

Group sales revenue for the quarter declined 5.1 per cent on-year to 71.79 billion baht due to lower sales revenue in the beer, non-alcoholic beverages and food businesses.

This was partially mitigated by increased sales in the spirits business, which booked a 1 per cent year-on-year growth in sales revenue despite the resurgence of Covid-19 in Thailand. ThaiBev said the spirits segment remained resilient during this period as most of its products are consumed via off-trade channels.

Sales revenue of the beer business declined 9 per cent from the year as a result of the slowdown of Sabeco's sales volume, as well as the impact from the resurgence of Covid-19. The group cut advertising, promotion expenses and staff costs for the businesses over the quarter.

The non-alcoholic beverages segment saw revenue decline 12 per cent from the year before as total sales volumes of carbonated soft drinks, drinking water and other products fell. Reduced transportation costs however more than offset the lower revenue in the segment's bottom line.

Revenue for the food business was down 19.3 per cent on lower revenue from Oishi food, which remains impacted by the pandemic. ThaiBev says its food business has nonetheless minimised this impact by enhancing home delivery and takeaway options, as well as implementing cost-saving projects.

Despite recording lower top lines for the quarter, the beer, non-alcoholic beverages and food businesses each booked net profit gains as a result of the reduced costs and overheads.

F&N and Frasers Property booked total sales revenue of 16.7 billion baht, down 10 per cent year on year. While international beer business sales revenue declined 13 per cent, revenue generated by international spirits sales grew 13 per cent on-year due to the growth from Scotch whisky case sales, bulk sales and Chinese spirits as well as appreciation of the Burmese kyat over baht.

Earnings per share for the period was 0.34 baht, unchanged from the previous year.

ThaiBev's net asset value per share was 5.61 baht, down 1.2 per cent from 5.68 baht for the previous quarter.

The group has separately provided the financial statements in Singapore dollar terms over the same quarter for its brewery unit BeerCo, which it intends to spin off and list on the Singapore Exchange mainboard.

Net profit attributable to owners of BeerCo was S$77.4 million, up 72.4 per cent from S$44.9 million a year ago due to a lower effective tax rate in Thailand, offset in part by lower interest income as a result of the cessation in ThaiBev's cash pooling arrangements in Thailand.

The company's sales revenue declined 11.4 per cent to S$1.32 billion from S$1.49 billion the previous year. This comes as a result of lower sales volume of beer in both Thailand and Vietnam as Covid-19 restrictions and government regulations led to lower total consumption levels.

Going forward, ThaiBev said it intends to continue announcing its financial statements on a half-year basis instead of a quarterly basis notwithstanding its announcement for Q1.

RHB has reiterated its "buy" call on the stock and raised its target price to 94 Singapore cents from 82 cents, as it believes ThaiBev's plans to spin off BeerCo could potentially unlock more value and hence catalyse its share price.

In a Thursday research note following the results announcement, the brokerage said it expects a gradual recovery ahead for all of ThaiBev's business divisions, and believes the group's established presence in Thailand and Vietnam positions it well to capture an anticipated cyclical recovery.

"Post Covid-19, a recovery in on-premises consumption should help raise demand for Thaibev's beer, non-alcohol beverages, and restaurant segments. Its Vietnam subsidiary Sabeco should also improve on the absence of negative fake news and consumers being accustomed to Decree 100, which increased sanctions for driving under the influence," said its research team.

"Thaibev's ability to keep advertising and promotion expenses under control amidst rising economic activities and potential intensifying competition is likely to mitigate the earnings downside risk on the back of the challenging business environment," it added.

Shares of ThaiBev ended Thursday noon down two Singapore cents or 2.5 per cent at 78.5 Singapore cents, after the group's results were announced.