ThaiBev's beer business weeds out Thailand turmoil as profits climb 72.9%

Alcohol segment retains market share.

Despite Thailand’s political unrest scaling up in 1Q14, Thai Beverage PLC has shown earnings resilience. According to OCBC Investment Research, ThaiBev’s 1Q14 revenue increased 4.8% YoY to THB41.0b. Due to better-than-expected gross profit (GP) margin, PATMI increased 72.9% to THB6.0b.

The better GP margin came from beer and spirits segments. In 1Q14, beer’s GP margin was 18.9% (vs. 13.1% in 1Q13) while spirits’ GP margin was 33.5% (vs. 32.0% in 1Q13).

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The higher GP margins are due to raising average selling price (ASP) more than the increase in excise tax in 4Q13. On a QoQ basis, the GP margins for beer (vs. 15.3% in 4Q13) and spirits (vs. 32.6% in 4Q13) segments were also better as pre-excise tax increase inventory were sold without the higher ASP in Oct-13.

In 1Q14, spirits sold was flat YoY at 141m litres. However, there was a shift in product mix from brown to white spirits, which is more profitable due to a lesser need for advertisements and promotions. Beer volume, on the other hand, dropped by 11.7% YoY to 144m litres. Nevertheless, ThaiBev’s beer market share is still ~30% as the overall beer market had shrunk by the same degree after excise tax increase last year.