Thai Beverage Q2 2025 Earnings: Mixed Signals in a Challenging Beverage Landscape

Thai Beverage Public Company Limited (TBVPF) reported its Q2 2025 earnings on May 9, 2025, delivering a performance that balanced modest growth in key segments with persistent challenges in others. While the company’s earnings per share (EPS) met low expectations, the mixed results—driven by contrasting performances in beer, spirits, and non-alcoholic beverages—left investors with a nuanced outlook.

Key Takeaways from the Earnings Report

• EPS Performance: The actual EPS for Q2 2025 remained below 0.01 Thai Baht (THB) per share, aligning with the consensus forecast of "<0.01." This marked a 16.94% year-over-year (YoY) improvement from Q2 2024’s EPS of 0.008 THB.
• Segment Dynamics:
• Beer: Sales revenue rose 2.4% YoY to THB126,332 million, fueled by tourism recovery and operational efficiencies.
• Non-Alcoholic Beverages: Revenue increased 4.2% to THB65,802 million, with net profit up 9.3% due to cost reductions.
• Spirits: Revenue grew just 0.8% to THB120,728 million, but net profit fell 4.6% amid rising raw material costs.
• Myanmar Market: The spirits business in Myanmar showed improved performance, contributing to a 2.2% annual revenue rise for the company’s FY2024 (ended September 2024).
• Dividend Policy: A final dividend of THB0.47 per share was maintained, reflecting financial stability despite sector-specific headwinds.

The "Miss" in Context: Why the Mixed Reaction?

While the EPS technically met expectations, the stock price remained flat at THB0.43 post-earnings, suggesting investors were underwhelmed. The disconnect stems from two factors:

1. Underperformance in Core Segments:
2. The spirits division, which accounts for nearly 40% of revenue, saw net profit decline despite revenue growth. This underscores the pressure of inflation on input costs, a recurring issue for beverage producers globally.

3. The food business also struggled, though specific details were sparse.

4. Market Sentiment: Analysts had likely anticipated stronger results given the tourism rebound and the company’s restructuring efforts, such as increasing its stake in Fraser and Neave Limited. The lack of a clear EPS upside, combined with the spirits segment’s weakness, likely dampened enthusiasm.

Strengths and Weaknesses: A Strategic Crossroads

Strengths:
- Beer and Non-Alcoholic Growth: Both segments demonstrated resilience, with cost-saving measures boosting margins. The beer division’s 2.4% revenue growth aligns with Thailand’s tourism rebound, a critical tailwind.
- Myanmar Turnaround: The spirits business in Myanmar showed signs of stabilization, potentially signaling a longer-term recovery for the company’s international footprint.

Weaknesses:
- Spirits Profitability: The YoY net profit decline in spirits highlights vulnerabilities to cost pressures, which could persist if inflation remains elevated.
- Lack of EPS Clarity: The "<0.01" EPS figure, while meeting forecasts, lacks granularity, making it harder for investors to assess underlying trends.

Outlook: A "Strong Buy" With Caveats

Analysts have maintained a "Strong Buy" rating (based on 3 analysts) due to Thai Beverage’s diverse portfolio and strategic moves, such as its focus on Myanmar and non-alcoholic beverages. However, the path to sustained growth hinges on:
1. Cost Management: Reducing raw material expenses in spirits and food.
2. Tourism Momentum: Sustaining beer sales as Thailand’s tourism recovery continues.
3. Debt and Dividend Sustainability: Maintaining dividends while managing debt from recent acquisitions.

Conclusion

Thai Beverage’s Q2 2025 results underscore the company’s ability to navigate mixed market conditions. While the EPS met low expectations and certain segments showed growth, the underperformance in core areas like spirits and food creates uncertainty. Investors should remain cautiously optimistic, watching for improvements in cost control and spirits profitability ahead of the next earnings report (Q3 2025, due August 7, 2025). For now, the stock’s flat reaction signals a wait-and-see approach until clearer signs of turnaround emerge.

In summary, Thai Beverage remains a "Strong Buy" for long-term investors betting on Thailand’s economic rebound and regional beverage demand, but near-term volatility tied to cost pressures and segment performance is likely to persist.