Thai Beverage outlook revised to negative by Fitch, rating affirmed
Investing.com -- Fitch Ratings has revised Thai Beverage Public Company Limited’s outlook to negative from stable while affirming its ’BBB-’ Issuer Default Rating and ’AA(tha)’ National Long-Term Rating.
The negative outlook reflects concerns about high leverage over the next 12-18 months. ThaiBev’s EBITDA net leverage increased to 4.1x for the year ended September 30, 2025, up from 3.8x the previous year. Fitch forecasts leverage will remain above 3.5x in fiscal year 2026, exceeding the threshold that could trigger negative rating action.
Fitch cited slower-than-expected deleveraging due to higher investments, weaker earnings, and the recent announcement that ThaiBev will acquire an additional stake in Vinamilk. The rating agency noted that despite higher leverage in FY25, the company increased shareholder returns, exceeded expected capital expenditures, and pursued acquisitions.
ThaiBev’s revenue fell by 2% in FY25, underperforming Fitch’s forecast of 2% growth. The alcohol industry faces ongoing challenges from political uncertainty, delayed tourism recovery, and high household debt in both Thailand and Vietnam, which have weakened consumer sentiment.
Fitch expects ThaiBev’s revenue to grow at low single digits during FY26-FY27, with EBITDA margins likely remaining stable at 22%-23%. The company is forecast to generate positive free cash flow of about THB10 billion annually over the next two years, which will primarily be allocated to debt reduction.
Capital expenditure is expected to moderate to THB11 billion in FY26 and THB9 billion in FY27, down from approximately THB14 billion in FY25. The completion of major investment projects in Cambodia and Malaysia will account for most of FY26 spending.
ThaiBev’s business profile remains supported by its leading market positions, including over 90% share in local spirits and 35%-40% beer market share in Thailand and Vietnam. The company has expanded its geographical reach into Myanmar, with Thailand now representing around 65% of revenue compared to over 90% in FY17.
The outlook could return to stable if ThaiBev reduces its EBITDA net leverage to below 3.5x by FY27. Conversely, maintaining leverage above 3.7x in FY26 and 3.5x in FY27 could lead to a downgrade.
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