Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ambev SA (ABEV, Financial) delivered another solid quarter of growth and profitability, with mid-single-digit top-line growth and high single-digit gross profit growth.
- The company achieved record volumes in Brazil, with premium and core plus brands growing significantly, particularly Corona, Spaten, and Original.
- Ambev SA (ABEV) has made significant strides in innovation, particularly in the beyond beer category and balanced lifestyle brands, including gluten-free and low-calorie beers.
- The company has successfully leveraged technology, with platforms like BEES and Zé Delivery enhancing market reach and customer service.
- Ambev SA (ABEV) has maintained strong cash flow generation, with cash flow from operating activities growing over 2% despite tax headwinds in Brazil.
Negative Points
- Ambev SA (ABEV) faced a tough consumption environment in Argentina, with volumes declining in the mid-teens.
- Normalized profit declined around 11% despite EBITDA growth, impacted by tax headwinds in Brazil.
- The company experienced challenges in Panama due to industry contraction driven by recent tax increases.
- In Brazil, the core brands declined by low single digits, with Skol suffering more than expected.
- Ambev SA (ABEV) anticipates cost headwinds in 2025, particularly from aluminum and currency fluctuations.
Q & A Highlights
Q: Can you provide more details on the pricing strategy in Brazil, especially ahead of the summer season?
A: Jean Neto, CEO, explained that Ambev took pricing actions earlier in September across the portfolio, which impacted volumes initially but was a strategic decision to lead the market. The focus brands performed well, and the company expects a return to normality in October.
Q: How is premiumization affecting the price mix in Brazil Beer, and can you elaborate on revenue per hectoliter?
A: Jean Neto, CEO, noted that premiumization positively impacts the brand mix, with sequential growth from Q2 to Q3. The company is expanding its wholesaler network, which affects the mix but benefits distribution costs and CapEx investments.
Q: What is the strategy for the lower end of the market in Brazil, considering new competition?
A: Jean Neto, CEO, emphasized the focus on maintaining core brand relevance rather than competing in the value segment. The strategy involves offering more pack price options with strong brands to maintain consumer frequency and affordability.
Q: Could you discuss the contribution margins in premium beer in Brazil and the impact on channel and packaging mix?
A: Jean Neto, CEO, highlighted the premiumization trend and the accretive mindset in brand propositions. The expansion of premium brands into RGB bottles is seen as beneficial, with Corona and Stella Pure Gold moving to returnable packaging.
Q: Regarding the BRL2 billion share buyback, is this part of a strategy to leverage the balance sheet?
A: Lucas Machado Lira, CFO, stated that the buyback is based on current excess cash and attractive stock valuation rather than a long-term capital structure change. The decision aligns with historical approaches to returning excess cash to shareholders.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
