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01/11 10:50
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents mixed signals. While there are positives like an increase in EBITDA, free cash flow, and shareholder returns, challenges such as rising costs, declining Skol volumes, and tax burdens impact sentiment negatively. The Q&A reveals concerns about competition and unclear management responses, which may temper investor enthusiasm. Overall, the balance of positive and negative factors suggests a neutral market reaction.
Consolidated EBITDA grew by 11.4% organically; 12.1% ex-Argentina.
Normalized profit declined by 2.3% due to a negative impact of almost R$3.5 billion in less tax deductibility in Brazil.
Cash flow from operating activities grew by 5.6%.
Free cash flow to equity increased by 37%.
Gross margin expanded by 170 basis points organically, 190 basis points ex-Argentina.
EBITDA margin expanded by 200 basis points organically, 220 basis points ex-Argentina.
Return on invested capital declined to 18.6% due to NOPAT margin contraction from significant tax headwinds in Brazil.
Cash flow from operating activities totaled a little over R$26 billion.
Cash flow used in investing activities totaled approximately negative R$5.5 billion.
Cash flow from financing activities totaled about negative R$10.4 billion.
Cash and cash equivalents ended 2024 with about R$29 billion.
Excess cash returned to shareholders totaled approximately R$12.5 billion, an 8.7% increase compared to 2023.
Intermediary dividends declared totaling approximately R$2 billion to be paid in April.
New Product Launches: Continued development of the beer category by offering innovative liquids and new packaging solutions.
Non-Alcoholic Beverages: Non-alcohol beer segment grew by 20%, led by Corona Cero and Budweiser Zero.
Digital Initiatives: BEES platform achieved 1.3 million monthly active buyers, a 14% increase from last year.
Market Expansion: Maintained beer leadership in eight of the top ten markets, with beer share of trout over 60%.
Brazil Market Performance: Beer industry grew by low single digits; volumes increased by 0.6% driven by market share gains.
Dominican Republic Growth: Volumes grew by mid-single digits, achieving all-time high volumes for Presidente brands.
Canada Market Performance: Mega brands grew volume by low-single digits despite a total volume decline of 3.1%.
Operational Efficiency: EBITDA grew by 11.4% organically, with gross margin expanding 170 basis points.
Cost Management: Disciplined approach to cost and expense management led to EBITDA growth and margin expansion.
Free Cash Flow: Generated nearly R$18 billion of free cash flow to equity, a 37% improvement versus last year.
Strategic Focus: Focus on leading and growing the beer category, digitizing the ecosystem, and optimizing business operations.
Future Outlook: Plans to expand margins and improve earnings per share while focusing on profitable growth.
Economic Factors: The company faces significant tax headwinds in Brazil, which have impacted financial performance and increased the effective tax rate.
Regulatory Issues: Nearly 60% of net value added went to federal, state, and municipal taxes, up from roughly 53% last year, indicating a rising regulatory burden.
Supply Chain Challenges: The depreciation of the Brazilian real and increased aluminum prices are expected to drive up costs, with cash COGS per hectoliter in Brazil beer projected to grow between 5.5% and 8.5% in 2025.
Competitive Pressures: The overall consumer environment in Argentina remains challenging, with the beer industry down in low 20s, affecting market share despite efforts to maintain stability.
Market Dynamics: In Brazil, bad weather impacted key beer consumption occasions, leading to a decline in Q4 volumes.
Digital Transformation: Over 88% of gross revenues transacted through BEES, enhancing customer engagement.
Market Leadership: Maintained beer leadership in eight of the top ten markets, with beer holding over 60% share of trout.
Product Innovation: Continued development of the beer category with innovative liquids and packaging solutions.
Non-Alcoholic Beverages: Led non-alcohol beer segment growth, particularly with Corona Cero and Budweiser Zero.
Capital Allocation: Executed 45% of the current share buyback program and approved R$2 billion in intermediary dividends.
Future Focus: Plans to lead and grow the beer category, digitize the ecosystem, and optimize business for margin expansion.
2025 Revenue Expectations: Expect cash COGS per hectoliter in Brazil beer to grow between 5.5% and 8.5%.
Profitability Outlook: Aim to stay on margin expansion track despite cost headwinds, particularly in Brazil.
Free Cash Flow: Continued focus on delivering free cash flow growth in 2025.
Dividend Payout: Declared R$2 billion in intermediary dividends to be paid in April 2025.
Market Strategy: Focus on profitable growth to deliver sustainable value creation to shareholders.
Intermediary Dividends: Distribution of intermediary dividends of around R$2 billion to be paid in April.
Dividend Payout: Approximately R$6.7 billion were in the form of dividends paid in January 2025.
Share Buyback Program: Executed approximately 45% of the current share buyback program as of today.
Excess Cash Returned to Shareholders: Announced approximately R$12.5 billion of excess cash to be returned to shareholders, an 8.7% increase compared to 2023.
Share Buybacks: Roughly R$2 billion were in the form of share buybacks, with approximately 800 million executed to-date.
The earnings call reflects a positive sentiment with strong financial performance, including revenue and EPS growth. Despite challenges in Brazil, the company is optimistic about brand momentum and upcoming opportunities. The Q&A session highlighted effective cost management and strategic initiatives, with successful expansion in premium segments. Although there are regional challenges, the overall outlook remains positive with expectations of margin improvements and sustained growth in digital platforms.
The earnings call summary and Q&A indicate positive financial performance with a 15% net income improvement and a double-digit growth in the Premium segment. Despite challenges like weather impacts in Brazil and a decline in cash flow, management's confidence in recovery and margin improvements is reassuring. The marketplace's GMV growth and strategic partnerships further bolster sentiment. While some uncertainties exist, the overall outlook, including a dividend announcement and continued brand strength, suggests a positive stock price movement within the 2% to 8% range.
The earnings call presents a mixed picture. Positive factors include high-single-digit net revenue growth, gross margin expansion, and a strong share buyback program. However, challenges such as a high effective tax rate, FX losses, and unclear guidance on key issues like price increases and CapEx temper enthusiasm. The Q&A section reveals some analyst concerns about management's vague responses, particularly regarding Brazil's pricing strategy and Skol's trajectory. Given these mixed signals and the absence of a market cap to gauge volatility, a neutral stock price movement is predicted.
The earnings call presents mixed signals. While there are positives like an increase in EBITDA, free cash flow, and shareholder returns, challenges such as rising costs, declining Skol volumes, and tax burdens impact sentiment negatively. The Q&A reveals concerns about competition and unclear management responses, which may temper investor enthusiasm. Overall, the balance of positive and negative factors suggests a neutral market reaction.
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