- Thai Beverage reported stronger revenue growth for FY2024 as the spirits segment picks up.
- Thai Beverage is expected to benefit from better consumer sentiment in Thailand and Vietnam in FY2025.
- Easing material costs could potentially improve Thai Beverage’s gross profit margins in FY2025.
Thai Beverage Public Company Ltd (SGX:Y92) (TBEV.SI), or ThaiBev, showed signs of a turnaround with its latest quarterly results. Although the company’s profit for the full year 2024 (FY2024) came in below Bloomberg consensus expectations, it demonstrated stronger revenue growth driven by a pick-up in its spirits segment, paving the way for a promising FY2025.
ThaiBev is a beverage producer and distributor based in Bangkok, Thailand. The company’s business comprises four segments – spirits, beer, non-alcoholic beverages, and food. ThaiBev is present in over 90 countries, including a network of 26 breweries in Vietnam. Chang, the group’s signature beer, is one of the most recognizable Thai beers locally and internationally.
Earnings Highlights
1. Profit Performance: ThaiBev’s FY2024 net profit after tax and minority interests (PATMI) was THB27.2 billion, down 0.8% year-on-year (YoY), and below expectations at 96% of Bloomberg consensus forecasts. This was mainly due to higher-than-expected tax expenses following the expiry of certain tax concessions for its non-alcoholic beverage business.
2. Revenue Growth: The group reported total sales revenue of THB340.29 billion, reflecting a stronger revenue growth of 2.2% YoY for FY2024. This was driven by a pick-up in revenue growth in the spirits segment, which accounts for 61% of net profit, particularly in the last quarter of FY2024 (4Q 2024).
3. Spirits Segment Leading the Way: The spirits segment saw a 7% YoY revenue growth in 4Q 2024. Continued low single-digit growth in brown spirits sales was observed in October and November 2024, driven by better consumer sentiment in Thailand due to the government’s cash handouts and recovery in tourism.
4. Beer Segment on the Rise: The beer segment also performed well in 4Q 2024. The Vietnamese beer market has shown positive growth recently, supported by increased government infrastructure spending and foreign investments.
Future Outlook
1. Thailand’s Economic Boost: ThaiBev expects to deliver revenue growth in FY2025, benefiting from Thailand’s cash handouts and a rebound in tourism.
2. Vietnam’s Recovery: ThaiBev maintained its status as the top beer brand and company in terms of sales volume in Vietnam for the past six months. The company is optimistic about FY2025 as Vietnam rebounds from a low base.
3. Improving Margins: Gross profit margins may improve in FY2025 as both spirits and beer segments benefit from lower raw material costs. ThaiBev expects molasses prices in the upcoming harvest in December 2024 to be 10-20% lower YoY. Additionally, its higher-priced malt inventory should be fully digested by the first half of FY2025, allowing for further cost savings in the second half of FY2025.
With strong revenue growth prospects and easing cost pressures, ThaiBev looks set for a better FY2025. While the outlook is positive, there are potential risks, including macroeconomic weakness that could impact sales volumes and lower margins amid higher brand investment and marketing activities to support sales growth.
As of November 22, ThaiBev has 11 ‘buy’ calls, three ‘hold’ calls, and zero sell calls among Bloomberg analysts.
Disclaimer: ProsperUs Manager of Content, Hailey Chung, does not own shares of the company.
Reference
CGSI Note | Thai Beverage | Nov 22, 2024
