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Thai Beverage Reports Mixed FY25 · Investor Exchange

• 0:02
  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
• 0:07
  Okay, let's untack this. We have the year-end 2025 financial statements for
• 0:13
  the group, this huge multifaceted conglomerate.
• 0:17
  And at first glance, the story they tell is,
• 0:21
  Well, it's a bit confusing. It's definitely not straightforward.
• 0:24
  Our mission today is pretty simple, though.
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  We need to figure out if this company is in retreat or if they're building a
• 0:30
  war chest for the future.
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  So we're going to go beyond the P&L headlines. We want to understand the true
• 0:35
  core performance, what's driving the big shifts, and maybe most importantly,
• 0:39
  what their huge capital spending tells us about what's next.
• 0:42
  And that's the key, because if you just look at that headline profit number,
• 0:46
  you'd think it was a really tough year.
• 0:47
  Exactly. We saw this drop in headline profit, but the total picture,
• 0:51
  it tells a much, much more surprising story. It really does.
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  Consolidated profit for the year, it dropped by about 10%, fell from roughly
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  35.3 billion baht in 2024 to 31.2 billion in 2025.
• 1:04
  Okay. And the profit that actually goes to the shareholders,
• 1:07
  the owners of the parent company, that followed the same trend,
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  down from 27.2 billion to about 25.4 billion baht.
• 1:13
  So that's a 4 billion beat it hit to the bottom line. That's never good news.
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  But here's where the numbers, for me, stop making sense in the conventional way.
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  You look at the total comprehensive income, the TCI, and there was this massive positive turnaround.
• 1:29
  It just suggests that the profit drop was masking something much more stable underneath.
• 1:34
  Exactly. TCI is kind of like looking at your total net worth, right?
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  It factors in things that are on paper, like the value of overseas assets that
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  fluctuate with currency. It includes these non-cash items that don't hate your
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  day-to-day profit number.
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  And the swing was huge. Oh, it's fascinating.
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  TCI swung from a devastating negative $8.8 billion billion in 2024 all the way
• 1:56
  up to a positive $12.8 billion in 2025.
• 1:59
  Wow. That's a $21 billion bait swing. It is. That kind of dramatic reversal
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  doesn't happen because sales just got better overnight.
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  That points directly to something external, some kind of non-operational accounting effect.
• 2:10
  It has to be. And for you as an investor, this is so crucial to understand.
• 2:15
  The perception of huge pain in 2024 was massively inflated by foreign currency translation losses.
• 2:21
  Almost 42 billion baht in losses. Just on paper. Just on paper.
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  Then in 2025, those losses were still there, but they shrank significantly,
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  down to about 17 billion baht.
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  So a lot of the volatility we're seeing in their results over these two years,
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  it wasn't about how well they sold spirits or beer.
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  It was about where the Thai baht was trading against other currencies. Precisely.
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  It was relative to their massive foreign debt and their overseas holdings.
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  So the headline profit numbers are dealing with real-world sales,
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  but the TCI number is dealing with a paper adjustment.
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  This raises a big question for me. If their statutory profit dropped by $4 billion,
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  but they're operationally sound, where do we see that strength?
• 3:00
  You see it in the most fundamental place you can look. Cash flow.
• 3:02
  Ah, okay. Net cash generated from their operating activities,
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  it actually increased. And strongly, it jumped from 38.2 billion baht in 2024
• 3:11
  to a really robust 46 billion in 2025.
• 3:15
  Wait, hold on. Their accounting profit dropped by 4 billion baht,
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  but their operational cash, the actual money from selling things every day,
• 3:23
  went up by nearly 8 billion. That's right.
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  Is that a sustainable model? Or is that just clever working capital management
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  that's masking a core sales problem?
• 3:31
  I think it's the engine humming louder, even with all the turbulence outside. Right.
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  The cash flow figure proves that the underlying process of turning inventory
• 3:40
  into money is just more efficient now. It shifts the whole narrative.
• 3:44
  You know, it goes from profit slump to currency distortion hiding operational power.
• 3:50
  Okay, so to really get the full picture of that profit dip, we have to look
• 3:54
  at the individual segments. We need to see who struggled and where all that
• 3:57
  cash is coming from. Exactly.
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  Let's break down where the revenue contraction actually happened.
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  The overall revenue took a dip, and it seems to be driven by specific geographic markets.
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  Vietnam, for example, which is a massive growth area for them. It is.
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  Its revenue fell pretty significantly, from 58.3 billion baht down to 50.1 billion.
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  And that decline in Vietnam is the critical context for their largest segment, which is spirits.
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  The historical backbone of
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  the company. It is. But it's not the automatic growth driver it once was.
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  Its profit declined from 25.3 billion to 23.2 billion before tax.
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  That revenue hit in Vietnam likely explains a huge chunk of that drop.
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  So the foundation of the group is showing some vulnerability,
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  which forces a strategic shift. Absolutely.
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  The good news here, though, is that the beer segment was resilient.
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  It actually showed growth.
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  Profit went from $7.6 billion up to $8.6 billion bought.
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  So beer is proving it can carry more of the weight. But the bad news continues
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  with non-alcoholic beverages, NAB.
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  That segment saw its profit shrink from $7.5 billion down to $6.7 billion.
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  And here's the biggest shocker for me, and frankly, it looks like a clear strategic failure.
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  Food. The food segment swung entirely into a loss. It reported a negative 43
• 5:11
  million bolt loss in 2025.
• 5:14
  After what? A profit the year before? After posting a positive 449 million bolt profit in 2024. for.
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  It's a major deterioration in performance. That doesn't just happen.
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  That suggests a huge market challenge or just poor investment choices.
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  It tells us the food segment is dragging the whole ship down.
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  Precisely. And beyond those big segment results, there were also other specific
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  expenses that dragged down that statutory profit.
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  The net foreign exchange loss that was recognized within the main profit or
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  loss statement, it nearly doubled.
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  And this is different from the big currency translation number we talked about. Totally different.
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  This is a real cash affecting loss. It rose from 327 million BAT to 791 million.
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  And their share of profit from partnerships, associates and joint ventures,
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  that got cut almost in half.
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  Dropped from about 5.6 billion down to 2.9 billion BAT.
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  It was a challenging environment, no doubt. We even see smaller tangible losses.
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  It was a 12.66 million write-off for damaged inventories from an earthquake.
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  Wow. So when When you combine all that, the macroeconomic headwinds,
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  the dip in Vietnam, the struggling abbey market, and the outright failure in
• 6:22
  food, you start to understand why that headline profit looked so poor.
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  Okay, that covers the performance and the why.
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  Now we have to stop looking in the rearview mirror at the P&L and start looking
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  at where they're putting their money, because that feels like the real story.
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  If 2025 was a struggle, their response is a massive high-stakes bet on the future.
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  This is the most important indicator of their outlook.
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  It's all in the capital deployment.
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  If management lacked confidence, they'd be tightening their belts.
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  Of course. Instead, total capital expenditure, or CapEx, it surged.
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  It shot up from $11.3 billion bait in 2024 to a remarkable $18.5 billion in 2025.
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  That is a clear, unambiguous signal that a major investment phase is happening,
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  regardless of the soft profit number.
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  And the breakdown of that spending shows a really distinct focus.
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  They aren't just spreading the money around thinly.
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  No, they're prioritizing. They're picking the winners and what they see as future
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  growth drivers, beer and non-alcoholic beverages.
• 7:21
  Absolutely. The beer segment saw its CapEx jump dramatically from 1.9 billion
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  bait to 5.1 billion. That's an almost threefold increase.
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  And NA, the non-alcoholic segment.
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  Despite its profit struggle this year, they're pouring money into it.
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  Huge corrective investment. CapEx there increased from 4.4 billion to 7.9 billion.
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  They are fundamentally upgrading and expanding their manufacturing base for
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  beer and for non-alcoholics.
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  They're trying to fix the very issues they saw this year.
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  So management is basically saying, we failed in food and spirits is under pressure.
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  So we're pouring billions into beer and Nadi to make those segments the undisputed
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  future of this group. And that focus is reinforced by their other corporate maneuvers.
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  You see a clear strategy of consolidating control and injecting capital where
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  they see that future potential.
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  The big move was increasing their shareholding in CIRMSIC appeal.
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  They took their state from about 66% all the way up to over 99% in 2025.
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  Which is basically full control. Total control. And that required a cash payment
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  of nearly 5.5 billion baht.
• 8:25
  This investment lines up perfectly with that massive CapEx jump we just saw in NA.
• 8:29
  At the same time, they reinforced the beer segment's expansion by completing
• 8:34
  the acquisition of a 65% interest in Saigon Binte Beer Group.
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  That was back in January 2025.
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  So they're still committed to the Vietnam market, despite the revenue headwinds
• 8:45
  there. They're buying into the long-term story. They are.
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  And to sharpen that focus even more, they're trimming the fat.
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  They're selling off non-core assets to help fund these huge projects.
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  On September 25th, they reclassified an investment in a joint venture,
• 9:00
  Vacoin Company. Right. I saw that.
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  Valued at about 1.1 billion backers. And they moved it to asset held for sale.
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  They're divesting non-essential assets to make sure their war chest is full
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  for this beer and an abbey battle. When you put it all together,
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  the huge CapEx, the strategic acquisitions, the surgical divestments,
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  the message is just aggressive, transformative confidence.
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  And a final signal of their financial stability is the dividend.
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  They still chose to increase the annual dividend for 2024 to 0.62 bet per share.
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  They are funding a massive expansion while still rewarding their shareholders.
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  But this massive investment cycle, it requires an equally massive financial
• 9:37
  structure to support it.
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  The group operates with a lot of long-term debt.
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  They do, although total outstanding loans did show a slight reduction year over
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  year, falling from about 234 billion bait to 227 billion.
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  And they rely heavily on corporate bonds and debentures for that long-term funding.
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  That's the bulk of it. It makes up nearly 135 billion bait of their non-current liabilities.
• 10:02
  But if you want real proof of their long-term strategic commitment,
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  You have to look at their future obligations. These are the locked-in contracts.
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  Locked-in. They have 6.6 billion baht remaining for capital commitments.
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  That's for future buildings, machinery, software, all directly tied to that CapEx push in BRNAB.
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  And beyond that, they have, what, almost 20 billion baht for other commitments?
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  Purchases, service agreements, sponsorships? These are contracts that extend
• 10:28
  their strategic vision years into the future.
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  It's the operational plan laid bare. And you get a sense of how focused they
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  are. For instance, a subsidiary renewed a three-year sponsorship with a U.K.
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  Company, obligating them to pay a minimum of 2.75 million pounds per year.
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  And they signed a new consulting service agreement. That requires a payment
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  of 287 million baht over the next three years.
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  These aren't just details. They're the pillars of their strategy.
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  So to manage the risk of borrowing all this money internationally to fund the
• 11:00
  expansion, they're basically buying financial insurance. A very good way to put it.
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  They're actively managing their foreign currency and interest rate exposure
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  using things like cross-currency and interest rate swap contracts.
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  And the notional amounts for these swaps, 66 billion Japanese yen,
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  200 million U.S. dollars.
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  This shows a really serious commitment to mitigating risk from their foreign
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  borrowings. It's sophisticated management.
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  It's designed to insulate their investment cycle from currency shocks.
• 11:28
  They're locking in the cost of their long-term funding so that the kind of volatility
• 11:32
  that tanked their TCI in the past doesn't derail their future CapEx plan. Yeah.
• 11:36
  Okay, so if we pull all of this together, what's the final consolidated view
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  of the group's position at the end of 2025? I think.
• 11:44
  While the headline statutory profit definitely dipped, the really robust operating
• 11:49
  cash flow and those smaller currency translation losses...
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  They stabilize the big picture. The group is facing a crisis in its historical
• 11:58
  core spirits in Vietnam and a strategic failure in food.
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  And their response is this high stakes, multi-billion bat bet.
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  It is. The massive surge in capital expenditure, especially focused on beer
• 12:12
  and non-alcoholic beverages, it just suggests a very aggressive,
• 12:16
  confidence-fueled outlook aimed at regional growth. So what does this all mean?
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  The management team is clearly not in retreat. They're actively shifting capital.
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  They're investing heavily in their core growth areas, consolidating control
• 12:28
  over subsidiaries like Sumsuck and trimming non-core assets.
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  They're positioning themselves for a big recovery. They're doubling down on
• 12:34
  their strengths to try to offset their weaknesses. Right.
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  So given this massive commitment to CapEx and the increasing control over their
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  subsidiaries, how quickly might this shift in capital deployment,
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  specifically the billions being poured into beer and non-alcoholic beverages,
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  how quickly could that translate into profitable market share gains and offset
• 12:53
  that recent strategic failure in the food segment? That's the billion.