Ambev SA ((ABEV)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Ambev SA’s recent earnings call conveyed an overall positive sentiment, highlighting significant achievements in EBITDA growth, digital ecosystem expansion, and cost efficiency. Despite facing challenges such as volume declines in the Brazil Beer segment and increased financial expenses, the company’s strategic growth in premium segments and digital platforms stood out as key strengths.
EBITDA Growth and Margin Expansion
Ambev reported a robust performance with a high single-digit organic EBITDA increase and a 110 basis point margin expansion. On a year-to-date basis, the company achieved double-digit EBITDA growth with a 160 basis point margin expansion, underscoring its strong financial health.
Premium and Super Premium Brands Performance
The company’s premium and super premium brands experienced low teens growth, expanding in 7 out of Ambev’s top 10 markets. This highlights the successful positioning of these brands in the market and their contribution to the company’s overall growth.
Digital Ecosystem Success
Ambev’s digital initiatives, particularly the Bees Marketplace and Zé Delivery, demonstrated impressive growth. Bees Marketplace achieved a GMV growth in the 90s, reaching an annualized BRL 7.4 billion, while Zé Delivery saw a 7% increase in GMV, driven by an 11% rise in average order value.
Cost Efficiency Achievements
The company’s focus on cost efficiency led to savings of over BRL 500 million in the quarter, effectively offsetting non-commodity cost inflation. This achievement underscores Ambev’s ability to manage costs effectively in a challenging economic environment.
Dividend Payout
Ambev’s Board of Directors approved an intermediary dividend payout of BRL 2 billion, bringing the total declared dividends for the year to BRL 6 billion. This decision reflects the company’s strong financial position and commitment to returning value to shareholders.
Volume Decline in Brazil Beer
The Brazil Beer segment faced a 9% volume decline, primarily due to unfavorable weather conditions, with 65 colder days compared to the previous year, affecting critical regions.
Challenges in Core Segment
The Core segment experienced a low teens decline in volumes, attributed to its higher sensitivity to industry performance and revenue management decisions, posing a challenge for the company.
Financial Expenses Increase
Ambev reported an increase in financial expenses, driven by FX carry costs in Brazil, FX losses related to dollar purchases in Bolivia, and a noncash impact from the appreciation of the BRL.
Cash Flow from Operating Activities Decline
The cash flow from operating activities saw a 9.2% decline, reaching BRL 3 billion, reflecting volume dynamics and lower sales tax payables.
Forward-Looking Guidance
Looking ahead, Ambev’s leadership highlighted expectations for continued growth despite challenges. The company anticipates maintaining its strategic focus on premium brands and digital platforms, which have shown resilience and growth potential. The Board’s approval of an additional BRL 2 billion dividend payout underscores confidence in the company’s future performance.
In summary, Ambev SA’s earnings call painted a picture of a company navigating challenges with strategic growth in premium segments and digital platforms. Despite volume declines in certain areas, the overall sentiment remains positive, driven by strong EBITDA growth and cost efficiency.