Bangkok--5 Mar--Moody's
Moody's Investors Service says that ThaiBeverage Public Company Limited's (Thai Bev) full-year results for 2011were in line with expectations and thus continue to support the company's
Baa2 issuer ratings and stable outlook.
"Although profitability was affected by the Thai Floods, particularly in the fourth quarter, with lower consumption levels and disruptions in itsoperations and supply chain, EBITDA margin was steady at 16%, same as theprevious year," says Annalisa Di Chiara, a Vice President and SeniorAnalyst at Moody's.
"This primarily reflects the continued solid performance from its key earnings contributor, the spirits segment, which accounted for 98% ofFY2011 EBITDA," she adds.
Full-year sales volumes increased across all product ranges except beer.The spirits segment generated volume growth of 6.2%, while EBITDA for thespirits segment increased 8.3% to USD686 million at year-end.
While sales volumes for beer contracted year-over-year, in line with Moody's expectations, the operating loss narrowed as the company pushedthrough some price increases. As a result, EBITDA loss for the beersegment was USD4.7 million, versus USD22.8 million for the prior year.
The non-alcoholic segment suffered the most severe operating andfinancial impact from the flooding, with two beverage facilities in thePathumthani province unable to operate at normal levels. Still, thenon-alcoholic segment generated EBITDA of USD6.4 million.
Due to the debt-funded acquisition of Serm Suk in October 2011, Thai Bev's debt level doubled to USD602 million at FYE2011. Notably, however,while the company has relied on short-term financing historically, itsuccessfully termed out a substantial portion of its debt. At the end offiscal 2011, it allocated 61.4% to long-term debt, compared with just6.5% the previous year.
"While debt levels increased significantly, Thai Bev has reduced itsreliance on short-term debt by terming out the acquisition-related debtand improving its debt structure to match the duration risk. The companyalso remains strongly aligned with its Baa peers with total debt/EBITDAbelow 1x at year-end," adds Di Chiara.
Moody's expects Thai Bev to reap benefits from the Serm Suk acquisition,including expanding its non-alcoholic product portfolio, broadening itslogistical network, and establishing an efficient returnable bottlesystem. The integration of sales forces will also boost revenue.
Thai Beverage Public Company Limited is the leading producer of beer andspirits in Thailand. It also commands strong market positions in theThai non-alcoholic drinks markets.