Beverage(US:TBVPY)2023-11-23 20:27Financial Data and Key Metrics Changes - Total sales revenue for the year ended September 30, 2023, was THB279,085 million, an increase of 2.5% year-on-year, driven by growth in spirits, non-alcoholic beverages, and food businesses, despite a slight decline in beer revenue [4] - Net profit decreased by 10.9% year-on-year to THB30,727 million, primarily due to declines in the beer and food businesses, while spirits and non-alcoholic beverages saw profit increases [4] - The proposed dividend for 2023 is THB15,075 million, maintaining the same level as last year, with a payout ratio of 55% [4] Business Line Data and Key Metrics Changes - Spirits business revenue rose by 3.1% to THB119,799 million, despite a 2.1% decline in sales volume, with net profit increasing by 2.5% to THB22,446 million, driven by price adjustments and a shift in product mix [5] - Beer business revenue decreased by 1.4% to THB120,829 million, with a 6.6% decline in sales volume, leading to a net profit drop of 34.3% to THB4,995 million due to increased costs and competitive pressures [6] - Non-alcoholic beverage revenue increased by 12.4% to THB19,602 million, with a 7.1% rise in sales volume, resulting in a net profit increase of 15.2% to THB675 million [7] - Food business revenue grew by 16% to THB19,070 million, but net profit declined by 82.7% to THB65 million due to increased operational costs and pre-operating expenses for new stores [8] Market Data and Key Metrics Changes - The spirits market in Thailand is seeing a shift towards brown spirits, which are expected to continue growing, although still below pre-COVID levels [10] - The beer market in Thailand is experiencing a decline in volume, attributed to lower-than-expected GDP growth and increased competition [13] - In Vietnam, the company has become the market leader in beer, focusing on growing market share and profitability despite a declining overall market [29] Company Strategy and Development Direction - The company aims to focus on market share, revenue growth, and profitability in its beer segment, with a particular emphasis on maintaining leadership in the Thai market [34] - The company is expanding its premium spirits portfolio through acquisitions, including Larsen Cognac and Cardrona Distillery, to enhance its international sales network [42] - The company is also looking to improve efficiency in SG&A spending while maintaining competitive marketing investments to defend its market position [39] Management's Comments on Operating Environment and Future Outlook - Management indicated that the beer market is expected to remain weak for the next six months, with tourism recovery anticipated to improve consumption in the latter half of the year [46] - The management expressed caution regarding potential excise tax increases, which could impact pricing strategies in the future [15] - Input costs for raw materials like molasses are expected to rise due to supply shortages, which may affect profitability [21] Other Important Information - The company has maintained a strong market share in the brown spirits segment, with estimates around 95% [35] - The company is preparing for the Tet festival in Vietnam, which has contributed to increased inventory levels [60] - The company is focused on maintaining a balance between growth and profitability, particularly in the spirits segment, while navigating cost pressures [36] Q&A Session Summary Question: Insights on the spirits business and brown spirits growth potential - Management confirmed that brown spirits volumes are still below pre-COVID levels but have room for growth [11] Question: Reasons for beer volume decline despite market reopening - Management attributed the decline to macroeconomic factors and competitive pressures, with expectations for gradual recovery [13][15] Question: Updates on excise tax proposals in Thailand - Management indicated that potential tax increases could occur in the second or third quarter of next year, depending on government budget needs [15] Question: Expectations for volume normalization and input costs - Management noted that while spirits volumes are expected to stabilize, molasses costs are likely to rise due to supply issues [21][19] Question: Market share updates in Vietnam and Thailand - Management reported that the company has gained market leadership in Vietnam and maintains a strong position in Thailand with approximately 50% market share [29][31] Question: Comments on recent acquisitions and their strategic importance - Management explained that the acquisitions are aimed at enhancing the premium spirits portfolio and expanding international market reach [42] Question: SG&A spending trends and future expectations - Management indicated that SG&A as a percentage of sales has returned to pre-COVID levels, with expectations to maintain efficiency despite competitive pressures [48][52] Question: Inventory levels and their implications - Management acknowledged increased inventory days due to market conditions and preparation for upcoming festivals, with expectations for normalization [60]