Fitch Revises Thai Beverage's Outlook to Negative; Affirms at 'BBB-'/'AA(tha)'

The Negative Outlook reflects the risks associated with high leverage over the next 12-18 months. ThaiBev's EBITDA net leverage increased to 4.1x in the year ended 30 September 2025 (FY25) from 3.8x at FYE24 and Fitch forecasts that leverage in FY26will remain above 3.5x, the threshold at which negative rating action would be considered. This is due to the likely moderation in earnings and the recent announcement it will acquire a further stake in Vinamilk. The pace of deleveraging has been slower than we expected over the past few years, due to higher-than-expected investment and weaker-than-expected earnings.

Fitch believes that a more prudent capital-preservation strategy would be required to reduce leverage to a level consistent with its ratings, in absence of stronger operating performance. Fitch notes that despite the higher leverage in FY25, the company increased shareholder returns, made more capex than we expected and undertook acquisitions.

Key Rating Drivers

Deleveraging Risk: Fitch expects ThaiBev's net leverage to remain elevated at around 3.5x-4.0x in FY26-FY27, as the current softer economic conditions could continue to put pressure on earnings over the next 12-18 months. ThaiBev's EBITDA net leverage in FY25 of 4.1x was also higher than our earlier expectation of 3.4x, mainly due to lower-than-expected sales, higher-than-expected marketing expenses, higher capex at a dairy factory in Malaysia and a small acquisition in Vietnam.

The recent announcement by ThaiBev's subsidiary, Fraser and Neave, Limited, to acquire an additional 4.6% stake in Vinamilk for cash of around THB7.2 billion will slow deleveraging and keep leverage elevated in FY26.

Slow Revenue Growth: Fitch expects ThaiBev's revenue to grow by low single digits during FY26-FY27. ThaiBev's sales in FY25 fell by 2%, underperforming our forecast for 2% growth. The alcohol industry is likely to continue facing challenges over the next 12-18 months due to unfavourable macroeconomic conditions. These challenges are due to prolonged political uncertainty, a delayed tourism recovery, and high household debt, which have led to weaker consumer sentiment and a contraction in demand for alcohol in both Thailand and Vietnam.

However, the EBITDA margin is likely to remain stable at 22%-23%, excluding excise tax (FY25: 22.0%). Fitch expects the reduction in raw material costs in the spirits and beer businesses to offset the impact of rising labour costs and increased marketing expenses for new product launches amid intense market competition.

Positive FCF: We forecast ThaiBev to generate positive FCF of about THB10 billion a year over FY26-FY27 on modest earnings growth and moderating capex. ThaiBev is likely to allocate FCF primarily to debt reduction. However, deleveraging could be delayed given ThaiBev's acquisitive strategy. FCF in FY25 fell short of our expectations, primarily due to softer sales amid challenging market conditions, accelerated capex ahead of FY26, and lower dividends from associate Vietnam Dairy Products Joint Stock Company.

Capex to Moderate: We expect capex and investment to decrease over the medium term to THB11 billion in FY26 and THB9 billion in FY27, from its peak of about THB14 billion in FY25. Capex for FY26 will be allocated mainly towards the completion of two major investment projects in Cambodia and Malaysia. Capex starting FY27 will be primarily focused on maintenance and efficiency enhancements.

Leading Regional Position: ThaiBev's business profile is supported by its leading regional positions, including in local spirits, with a sales volume share of above 90%. The company also has a strong beer market share of 35%-40% in Thailand and Vietnam. Its geographical reach has expanded into Myanmar, enhancing its operating scale and diversification, with Thailand's share of revenue at around 65%, versus over 90% in FY17. In addition, subsidiary Fraser and Neave, Limited is the leading dairy and non-alcoholic beverage manufacturer with strong distribution networks in south-east Asia, especially in Thailand, Singapore and Malaysia.

Proportionate Consolidation of Sabeco: Fitch proportionately consolidates the financial results of Saigon Beer-Alcohol-Beverage Corporation (Sabeco) to reflect ThaiBev's 53.6% ownership stake. While ThaiBev retains majority control, Fitch believes this approach aligns the group's credit metrics with the economic reality of its cash flow access, given the significant minority interest.

Peer Analysis

Bacardi Limited (BBB-/Stable) is more geographically diversified than ThaiBev as its products are sold in more than 160 markets worldwide although it has a smaller operating scale. Both companies have a similar financial profile as they are deleveraging after large acquisitions in 2017-2018. As a result, Bacardi and ThaiBev are rated at the same level.

ThaiBev has a stronger business profile than Turkish brewer Anadolu Efes Biracilik ve Malt Sanayii A.S. (Efes, BB/Stable). ThaiBev has a larger operating scale and more product diversification. Efes is facing challenges in Turkey, Russia and Ukraine. Efes' rating reflects increased leverage due to a decline in scale, diversification and overall market position from the deconsolidation of its Russian operations. Therefore, ThaiBev's rating is higher than Efes', reflecting its stronger business and financial profile.

Becle, S.A.B. de C.V. (BBB/Stable) has a strong business position as the world's leading tequila producer, although ThaiBev has larger scale than Becle. Becle also has a stronger financial profile than ThaiBev, with net leverage of around 2.0x, leading to Becle's higher rating.

ThaiBev's National Long-Term Rating is lower than that of PTT Public Company Limited (AAA(tha)/Stable), Thailand's largest oil and gas company. ThaiBev has a comparable business profile, but PTT's business is larger and more diversified, offsetting commodity volatility. PTT also has a conservative financial profile, with EBITDA net leverage of around 2.0x.

Fitch's Key Rating-Case Assumptions

• Net revenue for alcoholic businesses under ThaiBev's brands, excluding excise tax, to increase by a low single digit in FY26-FY27 due to weaker consumer purchasing power and limited price increases amid macroeconomic uncertainty;
• Net revenue of Grand Royal Group, ThaiBev's spirits business in Myanmar, to increase by 6%-7% a year in FY26 and FY27, supported by volume growth and its leading market position;
• Net revenue for Sabeco to recover in FY26 after declining over the past three years, driven by demand recovery in Vietnam;
• Net revenue of non-alcoholic beverages to grow moderately by 3%-5% in FY26-FY27, supported by plan to ramp up the building of new facilities in Malaysia and Cambodia;
• Revenue of food segment to rebound gradually by 2%-3% in FY26-FY27;
• EBITDA margin of 22%-23% in FY26-FY27, as a sales volume rebound, cost efficiency implementation and lower raw-material costs are offset by inflationary pressure and higher labor costs;
• Capex of THB9 billion-11 billion a year in FY26-FY27;
• Dividend payout ratio of 50%-55% in FY26-FY27.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

• EBITDA net leverage remains above 3.7x in FY26 and 3.5x in FY27.
• Evidence of weakening market position, operating efficiency or pricing power, resulting in continued slow sales growth and a narrowing profit margin

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

• The Outlook could be revised to Stable if ThaiBev is on track to reduce EBITDA net leverage to below 3.5x by FY27.

Liquidity and Debt Structure

ThaiBev had THB43.7 billion in debt maturing within the next 12 months at FYE25, of which THB7.7 billion were working-capital loans from banks that are likely to be rolled over. The remaining bank loan and debenture maturities of THB23.2 billion and THB12.8 billion, respectively, will be supported by its cash balance, excluding Fitch-defined restricted cash, of THB37.1 billion and undrawn committed revolving credit facilities of around THB5.3 billion. Liquidity is further supported by its access to capital and credit markets due to its strong credit profile and robust FCF generation.

Issuer Profile

ThaiBev is Thailand's largest beverage producer and south-east Asia's leading beverage and food producer and distributor.

Summary of Financial Adjustments

Proportionate consolidation of Sabeco.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS

Click here to access Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision.

• ข่าวFitch Ratings
• ข่าวo:editor
• ข่าวo:fin
• ข่าวo:loc
• ข่าวen