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Earnings Transcript for TBVPF - Q4 Fiscal Year 2024

Operator: Good evening, everyone, and thank you for joining the Thai Beverage Fiscal Year 2024 Results Call. All participants have been placed in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. I will now hand over the call to the presenters Ms. Namfon Aungsutornrungsi, ThaiBev's Head of Investor Relations; and the members ThaiBev's senior management team. Thank you.
Namfon Aungsutornrungsi: Good evening, ladies and gentlemen. Welcome to ThaiBev's full year 2024 ended 30th of September 2024 financial results conference call. I am Namfon Aungsutornrungsi, Head of Investor Relations. For the call tonight, I will start with a summary of the full year results. Then we will open the line for Q&A with our management team here. For the summary of the full year results, on 28th of September 2024 InterBev Investment Limited or IBIL, and indirect wholly-owned subsidiary of ThaiBev completed a share swap transaction with TCC Assets Limited or TCCAL. The transaction resulted in an increase in IBIL's percentage interest in Fraser and Neave Limited shares from 28.31% to 69.64%, making ThaiBev the holding company of F&N and seek to hold any interest in Fraser Property Limited. As IBIL and TCCAL are under common control of the same ultimate controlling shareholder. The transaction is accounted for as a business combination under common control. Accordingly, the group's full year 2023 consolidated financial statements have been restated for comparative purposes. Total sales revenue of the company for the fiscal year ended 30th September 2024 was THB340,289 million, an increase of 2.2% when compared to the same period last year, driven by growth across our Beverage and Food segments. Net profit was THB35,270 million, an increase of 0.6% compared to the same period last year. This was due to an increase in net profit from the beer business, non-alcoholic beverages business and other business, partly offset by a decrease of net profit from spirits and food business. The Board of Directors has proposed a dividend for full year 2024 THB11,810 million or THB0.62 per share, which is higher than last year. This translated to a payout ratio of 53.9% of profit attributable to shareholders, which includes net profit of F&N Group. Attributable to former shareholders during the year, based on the group's percentage interest received for business restructuring and the command control. Please note that the interim dividend was paid in June 2024 at THB0.15 per share. Therefore, the final dividend will be THB0.47 per share. In 2024, the spirits business reported sales revenue of THB120,728 million, up 0.8% year-on-year. This was driven by an increase in sales volume of white spirits, as well as robust performance in Myanmar market, which showed improvement in both sales revenue and EBITDA. However, higher raw material costs increased investments in brand and marketing activities led to a 4.6% year-on-year decline in net profit to THB21,385 million. The beer business recorded sales revenue amounting to THB126,332 million in 2024, an increase of 2.4% year-on-year, supported by rebound in tourism and higher beer consumption due to the warmer weather in Thailand. With lower raw material costs, improved operational efficiencies and effective brand and marketing investments. The beer business achieved a net profit of THB5,221 million, a 3.9% increase compared to previous year. The non-alcohol various business saw a 4.2% year-on-year rise in sales revenue to THB65,802 million in full year 2024. This was due to a higher sales volume across all categories as a result of successful brand building from distribution expansion and effective consumption campaigns. Despite higher investment in brand and marketing activities, the business posted 9.3% year-on-year growth in net profit to THB5,934 million, supported by lower packaging costs, favorable commodity price and enhanced production efficiency. In 2024, the food business registered 5.5% year-on-year increase in sales revenue to THB22,288 million, driven by the opening of new stores. However, the net profit fell to THB301 million, due to a combination of higher raw material costs, increased operational expenses and investments to enhance brand visibility and accessibility. Additionally, the results were further impacted by a decrease in one-time fair value gains from the remeasurement of F&N's investment in Cocoaland in the prior year. In 2024, the group's other business registered a decline in sales revenue from publishing and printing business of 6% year-on-year to THB5,400 million. This was mainly due to a decrease in sales revenue from lower international printing demand and the closure of unprofitable business units. Net profit, which includes a share of profit of investment in Frasers Property Limited was THB2,429 million. So this is the summary of our fiscal year 2024 financial results. Now we will open the call to any questions on our results. Operator, please open the line for Q&A.
Operator: Thank you. We will now begin a question-and-answer session. [Operator Instructions] Our first question comes from the line of Llelleythan Tan from UOB. Please go ahead.
Llelleythan Tan: Okay. Hi. So I'll just repeat. So my first question is for the beer cost of goods. So I see that it has fallen about 0.6 percentage points of sales revenue. So I just want to say, what's the outlook or just to go -- to fall moving forward? And then also, I see that the SG&A has also fallen. So is that due to -- do you see lesser competition or do you try to spend more or do you see it's just better cost efficiency? Then the next question is about the spirit. So can I just have an update about the brown spirit? So I see that revenue is...
Namfon Aungsutornrungsi: Hello, Llelleythan. We couldn’t hear you.
Operator: Sir, Llelleythan was somehow muted. Just give me one second. Let me -- I'm sorry to let you know that Llelleythan's line has got disconnected. He's back. Just give me one second. Llelleythan, your line is open. [Multiple Speakers] Please go ahead.
Llelleythan Tan: Yeah. Okay. So for the beer, I see that the cost of goods sold has fallen. So I just want to know what's the outlook going forward? And do you expect it to trend downwards? And the SG&A as well. Is it because the lesser spending because of lesser competition or is it just cost efficiency? Then for the spirit, I just want to know what's going on with the brown spirits. So could you share some color on the brown spirits? Thank you. Hello?
Unidentified Company Representative: Hi. This is [indiscernible] Thailand. So if I understand your question completely. There are two things. Number one is, what is the reason behind the decreasing of the cost of sold? And the second question is, what is the reason behind of the decreasing of the cost of SG&A? So for the first one, I will say that we see that from last year, we see the -- yes, we have the lower raw material costs, and we also have the improve of the operational efficiency. And then for the outlook for this year, we still see in the positive trend. And for the second question, I will say that we don't -- we didn't have the less competitors, the beer market in Thailand is still very intense. All the competitors still playing on the ground. So the reason that we have lower SG&A is mainly due to the more efficiency for the investment in the A&P and the control of our overhead. So I hope that answered your questions.
Llelleythan Tan: Yeah. Thank you.
Lester Tan Teck Chuan: Llelleythan, hi. This is Lester here. Let me just give you a little bit of background into the Vietnam COGS as well as SG&A. COGS, actually for us, remains fairly high. We are still using the hedge materials from a couple of years ago. This should run out by Q1 -- our Q1 next year, the first Jan to March next year. So moving forward, I think trending it should be better. SG&A, of course, it continues to be very competitive in Vietnam. But what we've done is we have made our spending more efficient. I think in the Sabeco call, I was explaining how we use an ROI model for A&P activities. And so we have reclassified a lot of our activities to make sure that we spend only on the more efficient ones. And so while we gain share, we've been doing it at a lower cost. A - Prapakon Thongtheppairot Llelleythan, this is Prapakon, the group CFO. Just to sum up, the cost of goods generally in Thailand for beer have already come down, and we have high efficiency in spending contributing to a lower SG&A. For Vietnam, we are expecting to have a lower cost of good that coming up in the next 6 months. So trending downward would be and continue to be fairly efficient in terms of spending and controlling our SG&A. So that's a general answer on the beer side. On the spirit side, for the brown spirit, well, in Thailand, over the past 12 months as we reported, we have a quite decent white spirit volumes. As for brown spirit, it has a small decline due to consumption at lower year-on-year. And the year before, we had a good increase. So this one is lower back to the base of the year earlier. So that's generally what happened. We started to see an increase or improvement towards September, now into October month and November month. So we're expecting the brown spirit to give us a low-single digit growth coming up in this few months as well.
Llelleythan Tan: Okay. Thank you.
Operator: Thank you. Our next question comes from the line of Zheng Feng Chee from DBS. Your line is open. Please go ahead.
Zheng Feng Chee: Thanks for taking question. So just two questions from my side. Firstly, maybe on BeerCo, could you share about any updates regarding partnerships or potential IPO, the BeerCo IPO, your color on that? And number two, maybe a bit more color in terms of your strategy in the food and non-alcoholic beverage front, given this recent share swap and a few other acquisitions done in Thailand. Yes, maybe just these two questions. Thank you.
Namfon Aungsutornrungsi: Michael, can you help us for the BeerCo IPO, please?
Kosit Suksingha: I think while we are waiting for Michael, this is Kosit. I'll be answering on the NAB questions. Regarding the synergy after the share swap, I think what we have put it in the paper earlier, I think we do expect the synergy in terms of the volume aggregations of how we procure raw materials and also other supply chain costs, right? And that's -- the other part is on the R&D because we started to do all the -- combining our research development initiative altogether, and that would probably help reduce our -- lower our cost of the R&D, the hub. Yes, the second synergy we are expecting is the joint of the route to market. I think the infrastructure network in Thailand is very -- we have a very extensive infrastructure, especially in route to market. So combining this, we probably ensure us a better distribution capabilities of our NAB products. And, I think, last part is that, I think, we do expect that we'll be able to bring some of the products from F&N into other markets as well. I think we'll be having a new product launch for this coming year. Thank you.
Michael Lau Hwai Keong: Hi. Can you hear me now?
Namfon Aungsutornrungsi: Yes. We can hear you.
Michael Lau Hwai Keong: Okay. Great. Okay. The question on the BeerCo IPO. Well, just as an update, as you know, with the recent interest rate cuts in the U.S. and the result of the U.S. elections, the markets have turned rather optimistic, and there have been a lot IPO activity in Asia Pacific. So this is the time that we're going to start to evaluate whether we should, in fact, we launch our IPO. I would say that this is subject to assessment of the current conditions. And at this point in time, we have no concrete plans just to be clear. But as soon as we make a decision, time to make an announcement at the appropriate time. So I hope that clarifies that because it's the often asked question these days. On the second part of our strategic partnerships, we continue to engage with several potential strategic partners, but nothing has materialized at this point in time. It is the normal course of our business. We are always regularly in touch with peers and potential partners from all sorts of segments. And we will continue to explore opportunities with them. Once again, when we have anything concrete in this area, ThaiBev will also make an announcement. I hope that’s sufficient to address your questions. Thank you very much.
Zheng Feng Chee: Yeah. Thank you, Micheal and that’s really helpful. Thank you. I’ll jump back in the queue. Thank you.
Operator: Thank you. Our next question comes from the line of Xuan Tan from Goldman Sachs. Your line is open. Please go ahead.
Xuan Tan: Hi. Good evening. Can you hear me?
Namfon Aungsutornrungsi: Yes. We can hear you, Xuan.
Xuan Tan: Great. Thanks for the time. First question is on, going to next financial year. I think you talked a bit about brown spirit, what you're seeing currently is about low single digit. Can you talk a bit more about what you're seeing for white spirit, Thai Beer and Vietnam beer as well?
Prapakon Thongtheppairot: Hi. This is Prapakon, Group CFO. Generally, we don't give much of a forward indicator. But I think you answered -- the answer I was giving earlier because I think the question is relating to a softening of the brown spirit that we have experienced in the past year. So what we have seen in the current month, as we're expecting in the next few months is a probably a recovery of a single-digit growth in the brown spirit. That's as much as we are indicating. So we wouldn't give much indications on the other business as usual.
Xuan Tan: Okay. Got it. Can you touch a bit about the spirit cost of goods sold and as the raw material there?
Prapakon Thongtheppairot: Yeah. The cost of goods sold have inched up in Thailand. I think some earlier call, we have discussed about our raw material have to do with molasses in the previous crop that was quite expensive. I would use the word expensive because it’s much higher than in the previous year or many years. So that’s considered a peak for us. And we have now started experiencing much lower or acquiring molasses for the new crop but much, much lower price. And this is the crop that will start harvesting in December of this year, which is next month. So that we can indicate that we -- our molasses acquisition for this new crop are much lower in issuance of over 10% to 20% much lower than the year before.
Xuan Tan: Okay. Got it. Thank you. I’ll jump back to the queue.
Operator: Thank you. Our next question comes from the line of Thitithep Nophaket from Phatra Financial Group. Your line is open. Please go ahead.
Thitithep Nophaket: Hi. Thank you. I have two questions. The first one, the Thai government distributed THB10,000 cash handout towards the end of September, do you think that would overall boost consumption and then the consumption for the beverage that beer and spirit? And the second one, my understanding is that the Thai parliament has passed the law that would make it easier for people to obtain the license to operate these two lane approvals, but they only passed the first reading. When do you expect the law to be passed and may have your view on the potential implication? Thank you.
Ueychai Tantha-Obhas: Thitithep, this is Ueychai. The first THB10,000 have -- we really benefit from that because it's cash. The next THB10,000, if it is cash, it will benefit our business. But if they use digital wallet, I suspect that we probably will be difficult because they will have a lot of rule and regulation on what to spend, what product you can spend and all. So the next one, I think, is for the 60 years old people, I'm not sure. because they are too old to be a drinker. It's not like the last THB10,000.
Thitithep Nophaket: All right. May I have follow-up questions on that. From a calculation, if I calculate correctly, your fourth quarter sales of spirits and beer grew quite strong. Do you think it has anything to do with the cash handout? I hear the cash handout doesn't come into towards the end of the quarter, right or is there any other factors that drive the fourth quarter sales?
Ueychai Tantha-Obhas: I think this is starting to coming back, the consumption of both beer and spirit, especially beer -- because beer have a full benefit from tourist, brown spirit doesn't get that benefit because the tourist they don't drink brown spirit in Thailand. When they're coming in, they drink beer mostly. That's why beer is doing very well. But overall, it's getting better in the last quarter. And then for these two months, we can see the same trend. I hope it will be even better next year if people have more money. I mean the government probably trying to do a lot of measure to increase money in the pocket. So we should benefit from that.
Prapakon Thongtheppairot: Good evening. This is Prapakon. I think the questions earlier also to your second question is about the draft law or change of law and regulations about licensing a new license. I think, well, first of all, we believe the current law itself is quite relaxed. It's open up for a varieties of producer or a small producer. In fact, for spirit producer, the small producers have over 1,000 producers already in place. So I think the current law is we think is probably operatable for a small producer to introduce new products and grow to become bigger. However, there are a draft law that it is true that the draft law that was went into the parliament and one was rejected and two were accepted in the first round. At the moment, we understand that this subcommittee is continue to have a long debate over what to be coming out in the second round for parliament work. So at the moment, still have no indications of when it will come out. But we do expect further relaxations of regulations or make it easier, but I think this is a debate between regulations and public health and quality, the standard qualities of products that will be easily, well, easily made, but at the same time, have to be of high quality. So that's something we understand is still under debate.
Thitithep Nophaket: Helpful. Thank you very much.
Operator: Thank you. Our next question comes from the line of Paul Chew from Phillip Securities. Your line is open. Please go ahead.
Paul Chew: Yeah. Thanks. Thanks so much for the presentation. Just three, maybe, housekeeping items. In your accounts -- at least on the SGX filing, this is item call former shareholders before business restructuring. Just wanted to understand the nature of this item and whether would this also be reflected in your FY '26 results? That's my first question. The second question is just regarding your nonalcoholic beverage on Slide 16. Just wondering the difference between the net profit and the attributable profit to shareholders. So I just want to understand the minority interest, was there some change? Because this is the first time you're revealing the full year's NAB numbers. My last question will be maybe just on the Myanmar exchange rate that you're using. Are you using the official rate or are you using the bank bought rates?
Unidentified Company Representative: Hi, Paul. Christa (ph) speaking from ThaiBev. Maybe I ring out there one by one. The first one you asked about the former shareholder profit owner. This one based on the accounting standard. Actually, they try to separating the owner of the share, even we are on the common control by the same shareholders, but it's different of the group of the company. Then they try to break in the share, that actually ThaiBev owning for the F&N side, in the past, 28%, then we additional acquired from 41%, they would try to mention that this is a part of the consolidation group based on equating standard. But belong -- used to belong to the former shareholders that mean that next year -- I mean 2025 fiscal year. This one will reflect it to the ThaiBev book. This is going to be the meaning of the former shareholder in the sense. Second one is about you asking about why the net profit of the NAB when translated to be attributable profit to shareholders while it's going sacrificed to the minority. Actually, the consolidation basis after the share swap, we include the F&N as a total. But actually, when we look at the effective shareholding from ThaiBev to F&N, which is about 69.6%, then F&N will take in shareholder to the F&N Holding Berhad, another 5% does mean that actually some of the profit that we take out from the F&N side, in this part for attributable to shareholders just only the matter that we own, is not noncontrolling interest of the F&N. That is the second question. The third question is about the exchange rate in Myanmar. According to the IFRS or the Thai FRS in terms of accounting standard right now when we consult with auditors. The broadening market rate in Myanmar is still uncertainty, which is acting standard cannot allow to use it. We actually use the official rate, that way they announced by the government and some of the international deals will use the reference at the same rate to book as account. Does hope clear you question.
Paul Chew: Yeah. Thanks so much for the explanations. Can I just -- just want to confirm to this former shareholders before restructuring that THB4.7 billion, I think, is that part of your earnings per share computation? And so you're saying that in financial year '25, this line item will be considered as part of the -- your earnings per share competition? Sorry, I just wanted to clarify that.
Unidentified Company Representative: Thanks, Paul. Let me clarify again. In terms of earning purchase, we're actually based on what they call in accounting standard, they call basic earnings per share, actually, we will not count as the former shareholder. But we already disclosed in the north to financial on the number 32 on the earnings per share that I assume that when we announced the shareholder that we acquired after restructuring, if include the 41% F&N profit into the EPS we will have like a pro forma that we will calculate the EPS, including the after restructuring to comparison when we announced the share swap. But the basic you can see in note that, actually, we have bought include and not include the percentage of the additional shareholder that we have. But these shareholders will be reflect in fiscal year 2025.
Namfon Aungsutornrungsi: For more information, you can look at Page 119 and 120 of our note to financial statement. That one will explain more in detail for EPS.
Paul Chew: In your particular, you mean?
Namfon Aungsutornrungsi: For the financial statement, Page 119 and 120 under note 32.
Paul Chew: Yeah. Okay. That's not the exact one, right? That's the other...
Namfon Aungsutornrungsi: Yes, that's part of our announcement tonight.
Paul Chew: Okay. Thanks for taking the questions.
Operator: Thank you. So ladies and gentlemen, there are currently no questions. [Operator Instructions] Our next question comes from the line of Divya from Morgan Stanley. Your line is open. Please go ahead.
Divya Gangahar: Few questions from me. The first one is just if you can help us understand the drivers of the higher spirits volume growth in the fourth quarter? And you just commented that on brown spirit you expect it to improve. But just if you've already seen that improvement in the September quarter that's helped the overall numbers. The second question is on the beer volume growth. Could you help us understand the difference between the domestic peer volume as well as Vietnam? And if you can give any color on how that's been trending in October and November. And then the last question is just on the overall spirits margins. I just wanted to understand like the decline in margins year-on-year even though this is a low quarter, so what's really driven that? Besides the higher volume assets, which was already baked into the previous quarters. Is there anything else that's driving the lower margins? Thank you.
Prapakon Thongtheppairot: Divya, this is Prapakon. I'll address the spirit market. And then later on, we will have some with run Thailand beer and still around the Vietnam business to help give you some highlight on that business. The drivers in terms of that the white spirit consumption of white spirits with sale for us is quite consistent, as you know, we have a large scale of white spirit-based. And that continue to be stable, which is used -- would be stable, has been consistent with last year. The brown spirit, however, we have experienced some dose decline earlier in the year. And the fourth quarter brown spirit itself start to -- from the year-on-year start to stabilize. So I think it have adjusted down to a lower base, and therefore, we have seen that being back to the base. And like mentioned just earlier, in the other earlier questions, we have seen October and November improved in brown spirit sale so that we are expecting that going forward in the next few months. So I think as far as we can see in the next few months, we think that's continued to be improved based on a lower base that we experienced from last year. That's from the brown spirit in Thailand.
Unidentified Company Representative: Divya, this is Sonim (ph) Beer Thailand. So the question from you is, first what are the drivers that drive our top revenue in the Q4. So I would say that there are some -- they are both from the external and internal factors. From the external factors, for sure, for Thailand, we see the recovery of the tourists that are still -- I mean, that's already coming to Thailand at the level of the tourist number, right now, is almost the same as the pre-COVID-19 level. And second one, we know that -- you may know that we had a new government that tried to put to reorder economy. So sometimes some kind of the positive and more fear. And the last one, for the key strategic platform for the Changi and Thailand, we have one-off that is of football. And if you remind for the Q4, we gained some benefit from the football in euro that are coming during June and July and also some support from the or the Olympic games that we have in July and forecast. And so our team we try to cap that opportunities. And the second question is what the outlook for first quarter? We still see the positive turn on this. That's all happen.
Lester Tan Teck Chuan: Divya, Lester here. Just talking about beer Vietnam for us. I think you would have seen the numbers from last year where we had almost 12 consecutive months of decline for the total overall market. Obviously, the market has picked up since June quarter. So June, July, August, we've seen some recovery in the beer market. And so it's looking good that the market is growing again. It's down to a few things. One, obviously, is the government spending into infrastructure projects although we see that more in the north of Vietnam that government spending is heavy there and as well as new FDI money coming into the country. So with the market just on the cusp of new recovery, we actually are quite positive about 2025 especially our position now where we have become number one for six consecutive months in a row. So things are looking good for both the beer industry as well as Sabeco's role within the beer industry. Thank you.
Prapakon Thongtheppairot: My colleague remind me, we'll have an answer to you on the cost of goods or the gross profit margin for the spirit, that's contributed from a chain in product mix as we just have a smaller percentage of brown spirit in the mix. So that's make our gross profit margins slightly down.
Divya Gangahar: Got it. Can I just follow up on the market share comments for Thailand as well, like compared to overall industry have you guys -- and is the market share now above 40%?
Unidentified Company Representative: Yeah, the market share in Thailand. I would say that we are still going up. But overall for the company, you will say that still in the range of 40%.
Divya Gangahar: So the overall growth itself has been positive, and we've grown in line with the industry this quarter?
Prapakon Thongtheppairot: How would we say it, we are a little bit stronger than the market.
Divya Gangahar: Got it. And can you also comment on just the beer margins for the domestic business? I understand for Vietnam, it was mentioned that the high cost inventory would extinguish by March, so that should improve margins. How about for the domestic beer business?
Prapakon Thongtheppairot: As you can see from the last year FY 2024 compared to FY '23 that the gross margin performed -- but overall, we performed a bit better due to lower raw material and also better efficiency for the broad product channel and supply chain, and we continue to see that trend.
Divya Gangahar: Good. Thank you. Thank you very much.
Operator: Thank you. Our next question comes from the Andy Sim from DBS. Your line is open. Please go ahead.
Andy Sim: Can you hear me?
Namfon Aungsutornrungsi: Hi, Andy. We can hear you.
Andy Sim: Yeah, sorry. Okay. Yeah. I’ve a follow-up question earlier on the market share and competition. Can you get more color in terms of the Thailand beer market. in terms of, I understand that you are growing slightly stronger than competition. How is it trending versus the two -- I mean, the last -- is it trending better against the larger competitor or the new entrant and how you see yourself comparing against these two? That's my first question, more specifically on the Thailand beer market? And the second question is actually more maybe housekeeping. The reason to understand in terms of -- I noticed that the tax has actually gone up a fair bit. Maybe I haven't had the chance to go through the detailed financials, but I just wanted to understand what is actually the reason for the increased higher tax total cash itself?
Prapakon Thongtheppairot: So Andy, thank you for the question. Normally, we don't disclose the number, but will say that we are strong right now.
Unidentified Company Representative: Hi, Andy. Christa (ph) I think for the tax corporate, total tax this year, or have some of the few part that we have some changes from last year. Some of the increasing is included from the spread and some of the both spirit, beer and nonalcohol beverage because for spirit, actually, some of the profit that we generated, which came from some of the main map profit growing. Actually, that one we also keep paying high tax on that one. For the beer one assets, you see that actually, especially on the super profit growing for some part of the Thailand. So we have some higher profit based on the profit increase this year, so the tax increase accordingly. For NAB, actually, year-on-year, growing some of the major parts, some of the BU, we have some certain incentive of the tax piece expire this year. So some of the tax will be back to normal. That will be the critical key point that turning the tax higher than last year.
Andy Sim: So can I just confirm, so this will be roughly the effective tax that roughly we can expect going forward? Given the expiry of some tax balance sheets that -- I mean you say that the tax benefit...
Prapakon Thongtheppairot: Andy, this is Prapakon. So I think the number for us that released this period. It's a bit difficult to compare last year because when we consolidate F&N to the book. Yes, that number, when you compare then you start to look like we're paying more tax. But I think in general, F&N has its own profit and loss and that tax is blending into what we have. And right now, because we are -- based on the numbers you see, we actually do operate in Thailand, in Vietnam, then were followed by Malaysia, Singapore, Myanmar, so it's a blend of many jurisdictions inside. But generally, like what Khun Kitsada (ph) mentioned, some of the business have come out from the BOI or tax rate in Thailand. And then that made the effective tax rate have gone up, but that's in the nonalcoholic beverage side of the business. Because for the alcoholic beverage, those business do not have tax incentives.
Andy Sim: Okay. So what we can do is actually it will take a F&N reporting and also and we roughly will get a sense. So essentially, there are actually not much as more of the business combination that actually what we can see here. Is that the right way to look at it?
Prapakon Thongtheppairot: Yeah. I think that's correct. In term of tax, there's no change -- significant change in our tax or tax planning or strategies we're just operating as normal. But because the business are quite complex in many jurisdictions. But because I think a lot of these are coming from when we add F&N into the NAB business that see the composition of tax being higher just because what -- that's what it looked like in the F&N as a company.
Andy Sim: All right. Okay. Thank you. Thanks a lot.
Operator: Our next question comes from Llelleythan Tan from UOB. Your line is open. Please go ahead.
Llelleythan Tan: For us just previously. So yes, no more questions, sorry. Thanks.
Operator: Thank you. Our next question comes from the line of Xuan Tan from Goldman Sachs.
Namfon Aungsutornrungsi : Hello, Xuan.
Operator: Sorry, Xuan has come back to the participants and poll. Shall we open the next one? Our next question comes from the line of Thitithep from Kiatnakin Phatra Financial Group. Please go ahead.
Thitithep Nophaket: Just want to confirm that I understand the new accounting practice correctly. Because right now, you consolidate F&N, right? So if I look at the revenue, cost of goods sold and SG&A, you consolidate evidence from the beginning of the period. But then the actual restructuring did happen into September. So you made it has made in the line that's called a former shareholder before business distrust. Is that accurate?
Unidentified Company Representative: Correct. At the console level, we include all, but we're breaking the line of the ownership breaking the line [indiscernible].
Thitithep Nophaket: Okay. Helpful. That’s very clear. Thank you very much once again.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Selviana Aripin from HSBC. Please go ahead.
Selviana Aripin: Thanks for the opportunity. There is a question for Lester (ph) specifically with -- I guess, I guess, one of your key competitors in Vietnam already saying that they are actually looking at reinvesting a little bit more into advertising and brand building. How are you thinking about the state of competition going into the next year? What are you doing to basically counter some of these competitive challenges as well as maintain what is the number one position for you guys right now? Thank you.
Lester Tan Teck Chuan: Hi, Selviana. No, I think competition overall has always been quite intense. All the major international players are in the market and spending quite a lot of money. So all of us do invest heavily behind our brands, and it's no different for us. So we do the full range of marketing activities, both above the line as well as below the line. It is an open market. It's not a dark market like many of the other alcoholic industries in other countries in Asia. So it is a light market, and we continue to invest heavily behind our brands. I don't know if you read the news yesterday, we just launched a new R&D center in our brewery. So it's not only a matter of advertising, but also being at the head of the curve in terms of launching new products that cater to the needs of the market. So earlier this year, we launched a new brand. It's a lighter beer that caters to the changing taste of the new drinkers in the market. So we will continue to do such things as we move forward, spending correctly, but at the same time, meeting the needs of the consumers.
Selviana Aripin: Thank you.
Operator: Thank you. There are currently no questions. [Operator Instructions] Our next question comes from Xuan Tan from Goldman Sachs. Please go ahead.
Xuan Tan: I have a question on Vietnam beer. I guess earlier when consumption was weak, so the question benefited from down trading. So with the improvement in consumption, how are you thinking about a reversal of that and back into premiumization? And in terms of how you're planning your marketing dollars, is there anything that we will do differently?
Lester Tan Teck Chuan: I think that's a very good question. Yeah, you're correct. In the last couple of years, 2023, especially, there was quite heavy down trading from the highs of 2022. What we saw last year was a gradual moving up along the premiumness index. So what we did earlier this year, like I mentioned, we launched a new beer, which is in the mass premium space. So as drinkers move up the margin ladder, we have brands there that capture that demand and capture that space as well. So moving forward, again, we are -- we have a finger on the pulse of the market. So as we see what the consumers -- the way the consumers are moving, we adjust accordingly. Not just with our marketing activities, but also with our portfolio. So yesterday, when we launched our R&D center, we have quite a few recipes that are ready on hand to launch in the market, as and when consumer demand is there, we are ready to fulfill all the needs of the market.
Xuan Tan: Thank you. Would you be able to share what's the third quarter market share trend?
Lester Tan Teck Chuan: Third quarter market share -- sorry, third quarter as in which months are you...
Xuan Tan: The June to September -- July to September?
Lester Tan Teck Chuan: July to September, we continued to grow. So the gap widened between ourselves and our competitors. So at the end of September, we recorded the six month in a row of being number one in the market and the gap -- the share gap opened up further in September. I think there are some -- I know there are some people, some investment houses who also subscribed to AC Nielsen. All our numbers are AC Nielsen numbers. It's just that we cannot report. I mean, we our agreement doesn't allow us to report the numbers.
Xuan Tan: Got it. But number one, you're talking about volume, right?
Lester Tan Teck Chuan: Yes, by volume, correct.
Xuan Tan: Volume by beer brand?
Lester Tan Teck Chuan: Correct. So we are the number one beer brand in -- we have the number one year brand in Vietnam. And as a company, we are also number one when you put all the brands together.
Xuan Tan: Okay. That’s very helpful. Thank you.
Lester Tan Teck Chuan: Thank you.
Operator: Our next question comes from Llelleythan Tan from UOB. Your line is open. Please go ahead.
Llelleythan Tan: Just one quick question. How looking at ASP hike? So given that demand is about to -- is there any potential for any ASP hike across any of the SKU either beer or spirits.
Namfon Aungsutornrungsi: Nathan, can you explain your question again? We couldn't catch what you're talking about.
Llelleythan Tan: Yes. So given that demand has started to pick up is the outlook has improved, how are we looking at potential ASP hikes, like raising prices. So do you see any potential to raise prices for either the beer or the spirit segment?
Namfon Aungsutornrungsi: In terms of the price increase this one we are careful and we don’t give a forward outlook for the price increase.
Llelleythan Tan: Okay. Thank you.
Operator: Thank you. Our next question comes from the line of Bernice Chew from UBS. Your line is open. Please go ahead.
Bernice Chew: Hi. Could you -- I have just a question on NAB. So could you explain a little bit on your aspirations for the segment. I think there was an article that I commented that you expect double-digit growth for ThaiBev investment in [indiscernible]? So there's a little bit more color. Hello?
Kosit Suksingha: Hi. This is Kosit. I think regarding your questions on, I think, the outcome after the share swaps, right? I think as you can see that we're still, I think, process a lot of brands that are number one in every market. So I think we will continue to be the leader in that particular market, right? As for orders, I think heads up on our aspirational. I think that's what Khun Namfon (ph) just mentioned, we normally don't give that forward-looking statement, right? Thank you.
Bernice Chew: Thank you.
Operator: Thank you. Our next question comes from Xuan Tan from Goldman Sachs. Please go ahead.
Xuan Tan: Two more questions from my end. Interest expense, up 10% year-on-year. Can you talk a bit about your -- what's your average cost of debt now? And if you look at next year's refinancing, versus current spot as interest expense peaked?
Prapakon Thongtheppairot: Okay. This is Prapakon. The answer is have our net effective interest rate peak. The answer is no, because I think -- well, a long explanation to that was we do actually run fixed and float debt portfolio and most of our debt are fixed. And in this past year, our blended interest cost which is from ThaiBev perspective, not F&N because we just consolidate F&N across have inched up by about 50 basis points. But we believe that it could go up by a bit more because as our fixed rate bond mature and we refix with the new rate. However, we don't expect it to jump that much anymore. It's very close. I think within this year, it should probably inch up a bit, but will peak -- would have peaked already. And as the trend globally, the interest rate already start coming down. So I think we don't expect our net effective interest rate to go up much higher. I hope that works.
Xuan Tan: Yes. That's clear. Second question is on the restatement. So if I look at both FY '24 and FY '23, it consolidates F&N assuming on a 100% basis and then less out the mine -- is that right?
Unidentified Company Representative: Hi. [indiscernible] speaking. I think the total consolidation of the F&N, when you look at 2024 and 2023, actually, we include all of the debt together as a total.
Xuan Tan: Okay. So what was left in the associate JV is just Vinamilk mostly? Is that it?
Unidentified Company Representative: The major one of the associate will be the Vinamilk is a part of the F&N where we consolidate and we have some small associate in Thailand, just a small one.
Xuan Tan: Okay. Safe to assume majority of Vinamilk.
Operator: [Operator Instructions] As there are no further questions, we're now beginning to closing comments. Please go ahead, Ms. Namfon Aungsutornrungsi.
Namfon Aungsutornrungsi: Thank you for joining Thai Beverage conference call tonight. Again, if you have any more questions, please feel free to contact IR department at ir@thaibev.com. Thank you and have a good night.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.