ThaiBev net profit down 62% in Q1

Acquisition costs from four deals weigh on earnings

Acquisition costs helped send net profits down in the first quarter at Thai spirits maker Thai Beverage.

Earnings came in at 2.91 billion baht (S$122 million), down 62.3 per cent from the same period a year earlier.

The firm incurred due non-recurring acquisition costs of 2.35 billion baht from the four deals it completed in the quarter.

Chief among these came when ThaiBev and a Vietnamese partner paid more than 109.9 trillion dong (S$6.4 billion) for a 53.59 per cent stake in Saigon Beer-Alcohol-Beverage Joint Stock Corp, or Sabeco. Sabeco's results will be included in ThaiBev's numbers from the second quarter.

Net profit excluding the finance costs for Sabeco and other non-recurring expenses was 29.3 per cent lower at 5.48 billion baht. This translated into a 32 per cent dip in earnings per share from the same period a year ago to 0.21 baht.

Otherwise, ThaiBev's earnings per share was 0.12 baht, down 61 per cent.

Revenue in the three months to Dec 31 fell 2.6 per cent to 45.6 billion baht, as private consumption in the domestic beverage market increased at a slower-than-expected pace even after the official mourning period ended for the late King Bhumibol Adulyadej, because the economy had not yet fully recovered, the group said.

  • AT A GLANCE

  • Revenue:

    45.6 billion baht (-2.6%)

    Net profit:

    2.91 billion baht (-62.3%)

Domestic alcohol beverage sales were also affected by destocking of sales agents' inventory.

Spirits sales revenue dipped 5.8 per cent despite an increase in sales volume due to a change in product mix, and net profit slumped 21.1 per cent to four billion baht.

Beer sales dipped 4 per cent while net profit slumped 29.7 per cent to 886 million, as advertising and promotion expenses as well as staff costs rose.

Although total sales volume of beer fell 6.2 per cent, ThaiBev said it maintained its share of the market.

Sales of non-alcoholic beverages rose 5.8 per cent, narrowing the segment's net loss to 227 million baht, a 5 per cent improvement from a net loss of 239 million baht.

The food business reported growth in sales revenue and improvement in margin, driven by contribution from the acquisition of KFC stores.

Food revenue jumped 42.3 per cent and net profit surged from five million baht a year earlier to 109 million baht.

ThaiBev said it obtained bridging loans from various local and foreign banks to fund the acquisitions in the first quarter. It will manage to take out short-term debts in the appropriate time, it added.

The counter closed unchanged at 91 cents yesterday before the results were announced.

A version of this article appeared in the print edition of The Straits Times on February 15, 2018, with the headline 'ThaiBev net profit down 62% in Q1'. Print Edition | Subscribe