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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 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.
Net Revenue Increased by high-single digits year-over-year, driven by a 0.7% volume growth and a 6% increase in net revenue per hectoliter.
Gross Margin Expanded by 150 basis points year-over-year, supported by the increase in net revenue per hectoliter.
EBITDA Grew by double digits with a margin expansion of 180 basis points year-over-year.
Net Income Flattish at BRL3.8 billion year-over-year, impacted by higher net financial results and income taxes.
Net Financial Results Totaled minus BRL856 million, worsening by BRL450 million year-over-year due to FX losses, upstream cash costs, and increased carry costs on FX hedging.
Effective Tax Rate Reached 21.7%, up from 15% in Q1 2024, primarily due to a one-off benefit of BRL215 million booked in the previous year.
Cash Flow from Operating Activities Totaled BRL1.2 billion, an increase of 68% year-over-year, driven by EBITDA growth and lower cash taxes paid.
Cash Flow from Investing Activities Reached minus BRL484 million, an improvement of 56% year-over-year, primarily due to short-term investments performed last year.
CapEx Totaled BRL828 million, approximately 18% lower year-over-year, reflecting a focus on disciplined capital deployment.
Cash Flow from Financing Activities Totaled minus BRL8.8 billion, driven mainly by BRL6.6 billion in dividends paid and BRL1.2 billion in shares repurchased.
New Product Launch: Our most recent innovation, Beats Red Mix, was developed based on consumer surveys and has become the biggest launch among the Beats flavors.
Market Expansion: In Brazil, we delivered record volumes for our first quarter in both beer and NAB, with volumes increasing by 0.7%.
Market Share Growth: We estimate to have gained market share within carbonated soft drinks in Brazil.
International Market Performance: In Argentina, we continue to deliver sequential improvement in volumes led by beer business.
Market Share in Canada: We estimate to have gained beer market share in Canada with our mega brands rising volumes by low-single digits.
Operational Efficiency: EBITDA grew by double digits with a 180 basis points margin expansion, leading to BRL1.2 billion of cash flow from operating activities, an increase of 68% year-on-year.
Cost Management: Our disciplined approach to managing costs and expenses translated into the 10th consecutive quarter of consolidated EBITDA growth.
Strategic Focus: We are focused on three key objectives: avoid disruptions, maintain momentum, and build a stronger company.
Digital Transformation: We have been expanding our transactions via our digital platform, with monthly active buyers rising by high-single digits.
Foreign Exchange and Commodity Pressures: Ambev expects to face significant foreign exchange (FX) and commodities pressure starting in Q2 2025, which presents an important challenge for the company.
Net Financial Results: The company's net financial results worsened by BRL 450 million year-on-year, primarily due to FX losses from hard currency cash balance translation, costs from upstream cash in Argentina and Bolivia, and increased carry costs on FX hedging due to widening interest rate differentials.
Regulatory and Tax Issues: The effective tax rate increased to 21.7% in Q1 2025 from 15% in Q1 2024, driven by a one-off benefit in the previous year, indicating potential regulatory and tax-related challenges.
Macroeconomic Environment: In the Dominican Republic, volumes declined due to a softer macroeconomic environment and increased price relativity compared to other alcohol categories, highlighting economic factors affecting performance.
Market Dynamics: In Canada, adverse weather conditions and Easter phasing impacted industry volumes, indicating challenges related to market dynamics.
Key Objectives: Focus on avoiding disruptions, maintaining momentum, and building a stronger company.
Pillar One: Lead and Grow the Category: Achieved high-single digit volume growth and net revenue per hectoliter increase of roughly 6%.
Pillar Two: Digitize and Monetize: Expanded B2B transactions and marketplace GMV grew by 60%.
Pillar Three: Optimize Business: 10th consecutive quarter of EBITDA growth and margin expansion.
New Product Launch: Beats Red Mix developed based on consumer surveys, became the biggest launch among Beats flavors.
Dividend Announcement: Announced BRL2 billion intermediary dividend to be paid in July, totaling BRL4 billion in 2025.
Revenue Expectations: Expect significant FX and commodities pressure starting in Q2.
Net Income: Normalized net income in Q1 2025 totaled BRL3.8 billion, flattish compared to last year.
CapEx: CapEx reached BRL828 million, approximately 18% lower year-on-year.
Cash Flow from Operations: Totaled BRL1.2 billion in Q1 2025, a 6% to 8% increase year-on-year.
Tax Rate: Effective tax rate in the quarter reached 21.7% versus 15% in Q1 2024.
Intermediary Dividend: BRL2 billion to be paid in July, totaling BRL4 billion in dividends already announced in 2025.
Share Buyback Program: BRL1.2 billion in shares repurchased as part of the ongoing share buyback program, reaching 65% completion by the end of the quarter.
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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