Can the World Cup kick ThaiBev's alcohol business back into action?

The company expects consumption recovery due to match timings for Asian viewers.

Thai Beverage was beaten down for the half-year as its profits sunk 35% to $387.25m, no thanks to soft domestic consumption caused by weak macroeconomic conditions and more cautious spending by its customers, especially in the beer segment.

Thailand is still not in the mood for drinking as beer production continued to be on a declining trend in March, signalling weak market demand. The rate of decline has continued from -19.5% YoY in February to -5.1% YoY in March.

Moreover, OCBC Investment Research analyst Eugene Chua noted that the profits of its beer segment plunged 66.7% to THB703m due finance costs related to the acquisition of Sabeco in Vietnam.

However, over the near-term, management noted that it has many activities planned to leverage on World Cup in June 2018. Chua said the company expects a recovery in alcohol consumption "given compatible match timings for the viewers in Asia."

The analyst also said that ThaiBev's exposure outside Thailand should help ramp up the recovery. "Over the longer-term, we believe ThaiBev’s recently expanded exposure outside Thailand will help drive growth, and especially deem ThaiBev’s acquisition of the largest beer player in fast-growing Vietnam market, Sabeco, to be positive and strategically important," he said.

Management also noted during analyst call that ThaiBev now has management control over Sabeco. The shareholders of Sabeco voted to add three representatives of ThaiBev to its management board, local media said.

"In our view, [this] helps ease its ability to unlock potential synergies between the two companies in a large ASEAN market," he concluded.

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