ThaiBev's net profit drops 23.5% to $266.3m

Spirits and beer sales are fizzling out.

Beverage maker ThaiBev reported a decline in revenue and net profit for the past quarter as sales across segments continue to fall.

According to OCBC Investment Research, revenue was down 8.8% to THB50.3b ($2b) whilst net profit came 23.5% lower to THB6.56b ($266.3m).

Its Spirits segment sales came down by 7.5%, as beer and non-alcoholic beverages ended the month with declines of 13.9% and 3.2%, respectively.

"Spirits and Beer sales were down in 2Q due to lower volume sales from continued effects of the mourning period and on-trade consumption at pub and bar did not fully recover," the brokerage firm noted.

Here's more from OCBC Investment Research:

In addition, in our previous report for 1QFY17, we expected 2Q to reflect some weakness as the alcoholic segment resumed trade activities only 100 days after 13 Oct 2016.

Although there were savings of ~THB600-700m ($28.3m) from advertising and promotion (A&P) across all segments in 1QFY17, promotions went on as initially planned, hence
the decline in sales and higher A&P in 2Q resulted in the lower PATMI. 1HFY17 revenue was down 8.4% to THB97.2b and PATMI was marginally down 1.8% to THB14.3b ($580m), forming 51% and 55% of our full year estimates respectively, thus we deem this set of results to be within our expectations.

Furthermore, there was a higher base of sales in the same period last year, as the speculation that the government might raise alcohol excise tax caused agents to stock up inventory. While 1HFY17 net profit for Spirits was down 9.7%, Beer was up 3% mainly due to better gross profit, helped by lower bottle and raw material costs. For NAB segment, 1H net loss of THB511m ($20.7m) was better by 37.5% from last year, on better product mix and favourable packaging costs.