Agents' inventory destocking dragged local alcohol sales.
Thai Beverage PLC's (ThaiBev) profit plunged 60.98% YoY from $325.31m (THB7.74b) to $126.9m (THB3.02b) in Q1 as domestic alcohol beverage was affected by destocking of sales agents’ inventory.
Revenue decreased 2.6% YoY to $1.92b (THB45.6b) mainly attributable to its beer (-4%) and spirits (-5.8%) businesses.
OCBC Investment Research noted that spirits’ net profit declined 21.2% YoY to $168.08m (THB4b) with an increase in advertising and promotion expenses as well as higher staff costs.
Beer plunged 29.7% to $37.24m (THB886m) on lower sales volume, higher advertising, and promotion expenses, as well as higher staff costs.
Non-alcoholic beverages' net loss narrowed down 5% thanks to higher sales volume and lower advertising and promotion expenses.
Consequently, excluding Sabeco expenses and non-recurring expenses of $105.08m (THB2.5b), ThaiBev’s core profit fell 30.4% YoY to $226.96m (THB5.4b).
With regards to the bridging loan ThaiBev provided to its 49%-owned associate, Vietnam Beverage (VB), to finance the acquisition of Sabeco, management noted that it is in the process of converting the bridging loan to a long-term shareholder loan to VB.
OCBC analyst Eugene Chua said, "Whilst ThaiBev reiterated the shareholder loan will generate interest income, its current plan of deleveraging through repaying bank loans using internal cash and dividends from the acquired companies seem to be insufficient (i.e. high net gearing situation may last beyond 24 months)."
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