Beverage(TBVPY) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total sales revenue for the first half of 2023 was THB148,295 million, an increase of 3.7% compared to the same period last year, driven by growth in the beer, non-alcoholic beverages, and food businesses, despite a slight decline in spirits revenue [5][6] - Net profit decreased by 3.2% year-on-year to THB17,781 million, attributed to declines in net profit from the beer, non-alcoholic beverages, and food businesses, partially offset by gains in associated companies and the spirits business [6] Business Line Data and Key Metrics Changes - Spirits business recorded sales revenue of THB65,161 million, a slight decrease of 0.04% year-on-year, with an 8.5% decline in total sales volume due to high inventory levels from the previous year [7] - Beer business saw a 4% increase in sales revenue to THB64,434 million, despite a 2.2% decrease in total sales volume, attributed to price increases [8] - Non-alcoholic beverages business reported a 15.1% rise in sales revenue to THB9,439 million, driven by a 7.7% increase in overall sales volume, although net profit declined by 35.2% [9] - Food business experienced a 21.8% increase in sales revenue to THB9,365 million, but net profit fell by 51.2% due to increased operational costs [10] Market Data and Key Metrics Changes - International business recorded a 6.5% increase in sales revenue to THB39,262 million, with a 19.8% surge in international spirits sales, particularly in Myanmar and India [11] Company Strategy and Development Direction - The company is focused on gaining market share in the domestic beer market, with management expressing confidence in future growth despite current cost pressures [16][19] - There is an emphasis on improving efficiency in advertising and promotional spending, with a goal to maintain or lower per liter spending compared to pre-COVID levels [18][76] Management Comments on Operating Environment and Future Outlook - Management noted that the Thai beer market is experiencing fluctuations, but they remain positive about gaining market share and overall growth [16][19] - The company is prepared for potential challenges in the operating environment, including raw material price increases, and is looking for ways to optimize costs [17][23] Other Important Information - The board proposed an interim dividend payment of THB3,769 million, or THB0.55 per share, consistent with the previous year [6] - Management is conducting a feasibility study for restructuring the food and non-alcoholic beverage operations to enhance effectiveness and reduce costs associated with being a publicly listed entity [59][60] Q&A Session Summary Question: Performance of the beer business in Thailand - Management indicated that the domestic beer market is experiencing volatility, but ThaiBev has gained market share, reducing the gap with competitors [16][24] Question: Price hikes in the spirits business - Management confirmed that price increases for brown spirits have been implemented, with further increases planned for the second half of the year [20][22] Question: Outlook for domestic beer and spirit margins - Management expressed confidence in maintaining margins despite rising costs, with measures in place to protect the bottom line [19][23] Question: Decline in goodwill - The decline in goodwill was attributed to foreign exchange translation effects rather than significant changes in transactions [31][32] Question: Increase in working capital and inventory - The increase in working capital was due to higher sales and the need to build inventory to support growth [36][37] Question: Revenue decline in Vietnam - Management attributed the revenue decline in Vietnam to lower GDP growth and negative consumer sentiment, but expressed optimism for recovery [42][43] Question: SG&A expenses as a percentage of sales - Management indicated that SG&A expenses are expected to stabilize at current levels, with no significant increases anticipated [46][47] Question: Raw material prices outlook - Management confirmed that while molasses prices are currently higher, they expect prices to stabilize in the future [70][71]