Beverage(TBVPY) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total sales revenue for the fiscal year ended September 30, 2024, was THB 340,289 million, an increase of 2.2% compared to the previous year, driven by growth in the Beverage and Food segments [5] - Net profit was THB 35,270 million, a 0.6% increase year-on-year, attributed to higher profits from the beer and non-alcoholic beverages businesses, partially offset by declines in spirits and food [6] - The Board proposed a dividend of THB 11,810 million or THB 0.62 per share, reflecting a payout ratio of 53.9% of profit attributable to shareholders [6] Business Line Data and Key Metrics Changes - Spirits business reported sales revenue of THB 120,728 million, up 0.8% year-on-year, but net profit declined by 4.6% to THB 21,385 million due to higher raw material costs and increased marketing investments [8] - Beer business recorded sales revenue of THB 126,332 million, a 2.4% increase year-on-year, with net profit rising by 3.9% to THB 5,221 million, supported by improved operational efficiencies and lower raw material costs [9] - Non-alcoholic beverages saw a 4.2% increase in sales revenue to THB 65,802 million, with net profit growing by 9.3% to THB 5,934 million due to lower packaging costs and enhanced production efficiency [10] - Food business registered a 5.5% increase in sales revenue to THB 22,288 million, but net profit fell to THB 301 million due to higher raw material costs and operational expenses [11] - Other businesses, including publishing and printing, saw a 6% decline in sales revenue to THB 5,400 million, with net profit at THB 2,429 million [12] Market Data and Key Metrics Changes - The Myanmar market showed improvement in both sales revenue and EBITDA for the spirits business, contributing positively to overall performance [8] - The beer business benefited from a rebound in tourism and higher consumption due to favorable weather conditions in Thailand [9] Company Strategy and Development Direction - The company aims to leverage synergies from the recent share swap with TCC Assets Limited, focusing on procurement efficiencies and enhanced distribution capabilities for non-alcoholic beverages [28] - The company is exploring strategic partnerships and evaluating the potential for an IPO of its beer business, contingent on market conditions [31][32] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the operating environment, citing a recovery in tourism and government initiatives to boost consumer spending [68] - The company anticipates continued growth in the beer market, particularly in Vietnam, driven by government infrastructure spending and foreign direct investment [72] Other Important Information - The company is cautious about potential price increases for its products, indicating a careful approach to pricing strategy [117] - The effective tax rate has increased due to the expiration of certain tax incentives and higher profits from various segments [85][88] Q&A Session Summary Question: Outlook for beer cost of goods sold and SG&A - Management indicated that lower raw material costs and improved operational efficiency contributed to the decrease in cost of goods sold and SG&A, with a positive outlook for the future [19][23] Question: Update on brown spirits - Management noted a small decline in brown spirits but expects low-single-digit growth in the coming months due to recent improvements in sales [24] Question: BeerCo IPO and strategic partnerships - Management is evaluating the potential for an IPO of BeerCo, with no concrete plans yet, and continues to engage with potential strategic partners [31][32] Question: Drivers of higher spirits volume growth - Management highlighted consistent consumption of white spirits and stabilization in brown spirits, with expectations for continued improvement [66] Question: Market share and competition in Thailand - Management confirmed that the company is growing slightly stronger than competition, maintaining a market share above 40% [75] Question: Interest expense and cost of debt - Management stated that the net effective interest rate has not peaked, with expectations for a slight increase as fixed-rate bonds mature [124] Question: Consolidation of F&N - Management clarified that the consolidation of F&N includes all debt, with Vinamilk being a significant associate [126]