ThaiBev, the owner of Chang beer and Old Pulteney Scotch whisky, posted a 12% rise in half-year net profits this week, despite a tough six months for its beer business. Michelle Russell exmaines the firm's fortunes. 

Thailand, which derives substantial revenue from tourism, has been hit by a triple whammy by way of the economic downturn, political turmoil and H1N1 flu.

"If the economy continues to underperform, this will continue to be a drag on the company's performance this year," ThaiBev said in a statement to the Singapore Stock Exchange this week.

"However, barring unexpected events, ThaiBev continues to see some stability arising from our broad portfolio and continued growth in the brown spirits segment," the company added.

ThaiBev is one of Thailand's largest alcoholic drinks firms, alongside the privately held Boon Rawd Brewery. However, as a result of ongoing political problems in the country and resistance from anti-alcohol activists, the company is listed in Singapore but not in Thailand.

Cris Sholto Heaton of Money Week said the situation makes him "cautious" about the Thai market in general, but that "a good stock in a poor market can still be attractive".

And the company isn't doing too badly in the circumstances.

Net profits for the six months to the end of June rose by 12.2% to THB5.77bn (US$169m), compared to the same period of last year.

Net sales for the period crept up by 1% to THB54.3bn, while EBITDA grew by 5% to THB11bn.

ThaiBev is the dominant player in the local spirits market, accounting for 75% of total sales, according to Money Week.

Volume sales growth of 15% in spirits helped to offset a 26.5% drop in beer sales by volume for the six months. Spirits net sales rose by a fifth for the half-year, to THB34.7bn, with profits for the division up 41% to THB6bn.

Last year, the company bought local soft drinks producer Oishi in a bid to gain exposure to a relatively underdeveloped market in Thailand. Sales in this area were up 21.5% year-on-year in the first half.

It also acquired Yunnan Yulinquan Liquor Co for RMB69m in May.

The company also announced plans this week to expand its business abroad and introduce a functional drink both domestically and internationally, to reduce dependence on traditional markets.

"We want to strengthen and diversify our group's interests [across products and geography]," president Thapana Sirivadhana-bhakdi was reported by Thai News as saying.

And today (21 August), a Reuters report said the firm is eyeing a stake in a number of SE Asian drinks firms, including those in Thailand, Philippines and Singapore.

Money Week's Sholto Heaton believes the firm is well placed to invest.

"ThaiBev is well-placed to invest in promoting upmarket brands, boosting exports and making acquisitions. This is the kind of stock you want to own in the aftermath of a global credit crunch. It has the firepower for deals at a time when debt-dependent buyers can no longer compete."