ThaiBev says finances strong enough to back expansion abroad
THAI BEVERAGE reaffirmed yesterday that its financial status was strong enough to energise its overseas expansion, particularly after recently being assigned a “BBB” rating with stable outlook by Fitch Ratings.
Sithichai Chaikriangkrai, the director and executive vice president of the beverage giant, said yesterday that the international ratings agency last month had assigned his company not only a long-term issuer default rating of “BBB” but also a first-time national long-term ratings of “AA+”, both with “stable” outlooks.
“This is a reflection of our strong financial profile as a result of our robust competitive position with a broad and strong distribution network, diversified product portfolio and high barriers to entry, particularly in the alcoholic-beverage business,” said Sithichai, who also serves as the financial head of the company.
The rating agency said ThaiBev was the leader of Thailand’s beverage market, accounting for 90 per cent of the spirits sold in volumes, and 40 per cent of beer sales, despite legal restrictions on the consumption of alcoholic beverages.
The company also maintained an EBITDA (earnings before interest, tax, depreciation and amortisation) margin of more than 50 per cent in the spirits segment over the last few years and improved its EBITDA margin on beer to more than 12 per cent of net revenue last year, as a result of the revamp of its product portfolio.
Apart from the alcoholic-beverage segment contributing 87 per cent of total revenue, Sithichai said the company was also putting more focus on non-alcoholic drinks including green tea, soft drinks and the health-conscious beverage segment.
Meanwhile, the company also aims to strengthen its distribution network at home and in Asean countries. Currently the company has more than 400,000 points of sale across Thailand, including retail shops and restaurants. Outside the country, the company now holds 28.5 per cent of regional conglomerate Singapore-based Fraser and Neave, which is an arm to support expansion in the Asean region, particularly in non-alcoholic beverages.
“Through this venture, the company exports Oishi green-tea drinks to Malaysia and Singapore and Chang beer in Singapore. In the meantime, Thai consumers also have access to the 100 Plus energy drink produced by F&N,” he said.
Although the domestic market contributes the lion’s share of sales at 90 per cent, the beverage giant intends to broaden its regional footprints both through F&N and new mergers and acquisitions. By 2020, it targets overseas sales accounting for at least half of total revenue and becoming a leader in the Asean beverage market.
Sithichai said his company was ready for overseas expansion in any form thanks to its strong financial status, with various investment options including its own cash flow of about Bt20 billion, bridge loans and bond issuance.
His comments followed the Vietnamese government’s annou-ncement on Wednesday that it was selling its entire 89.59-per-cent stake in Saigon Beer Alcohol Beverage Corp (Sabeco) for US$1.8 billion (Bt62 billion) and its 82-per-cent holding in Hanoi Beer Alcohol Beverage Corp for $404 million.
Regarding this news report, Bloomberg’s website referred to a comment by Euromonitor analyst Andrea Lianto that ThaiBev was among the companies interested in Sebeco. Others were Asahi Group Holdings and Heineken NV.
