Ambev SA Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Lead and Grow the Category: Volumes grew in half of main markets (nearly 80% of consolidated volumes) boosted by Carnival, core beer segment performed in line with or above industry, above core brands had high-single digit volume growth, nonalcoholic beer brands mid-thirties growth, mega brands mid-single digit growth and gained brand equity in 8 top 10 markets.
• Digitize and Monetize Our Ecosystem: B2B: Monthly active buyers grew high-single digit, SKU per POC ratio improved low-single digit vs last year. Marketplace: GMV grew 60%, number of customers purchasing non-Ambev products grew low teens. DTC: Zé Delivery fulfilled nearly 17 million orders, 5% increase vs last year, enhanced understanding of consumer behaviors, offered products meeting consumer needs like Beats Red Mix developed based on platform surveys.
• Optimize Our Business: 10th consecutive quarter of consolidated EBITDA growth and margin expansion, EBITDA growth led to BRL1.2 billion cash flow from operating activities, increase of 68% vs last year, slight EPS increase.

Segment Performance

• Beer Segment: Volumes grew in half of main markets (nearly 80% of consolidated volumes) boosted by Carnival festivities. Core beer segment performed in line with or above industry in most main markets. Above core brands saw high-single digit volume growth. Nonalcoholic beer brands had mid-thirties volume growth. Mega brands had mid-single digit volume growth and gained brand equity in 8 of top 10 markets. In Brazil, beer volumes were resilient with 0.7% growth, above core portfolio (e.g., Corona, Stella Artois, etc.) ~30% of volumes and leading the segment, premium super premium brands grew 20s, core plus Budweiser grew high teens, core Brahma and Antarctica jointly grew mid-single digits, nonalcoholic beer volumes expanded ~40%. In Argentina, beer business saw sequential volume improvement, industry declined low-single digit, market share virtually flat, mega brands improved brand health. In Dominican Republic, beer volumes declined mid-single digit due to softer macroeconomic environment and widened price relativity. In Canada, industry volumes impacted by adverse weather and Easter phasing, but mega brands saw low-single digit volume growth and estimated gained market share.
• NAB Segment: Double-digit top line performance in Brazil NAB driven by volume growth from non-sugar CSD and sport drinks and revenue management initiatives. Volume grew 3.2%, Guaraná Antarctica Zero and Pepsi Black grew mid-20s and mid-30s respectively, estimated gained market share in carbonated soft drinks.

Guidance

• Expect significant FX and commodities pressure on Brazil Beer Cash COGS per hectoliter starting in Q2, which is an important challenge, but still pursue consolidated margin expansion in the year. Most business units delivered EBITDA growth and margin expansion in the quarter.

Risks

• Significant FX and commodities pressure, especially starting from Q2 on Brazil Beer Cash COGS per hectoliter.

Q: Henrique Brustolin asked about price performance of Brazil beer in Q1 and its impact on future quarters.

A: Carlos Lisboa explained that Brazil beer net income grew 2.4% in Q1 due to revenue management initiatives and brand mix, net revenue per hectoliter affected by pricing calendar mismatch and low carryover from last year, current portfolio provides more revenue management flexibility, and digital platform enhances promotion and discount management.

Q: Thiago Duarte asked about contribution of each geography to consolidated margin expansion and affordability of beer in Brazil.

A: Carlos Lisboa said 2025 faces cost headwinds, needs three pillars to work together, Brazil team has strong talents, Guilherme Fleury added that it will be helped by cost visibility, focus on controllable factors, and productivity levers.

Q: Isabella Simonato asked about sellout and sell-in volumes in Brazil beer Q1, price increase expectation in Q2, Skol's trajectory, and CapEx.

A: Carlos Lisboa said Brazil beer industry was affected by adverse weather in Q4, sellout volumes slightly positive and in line with industry performance, Skol is an important part of the portfolio and efforts are on to put it back on growth trajectory, Guilherme Fleury said CapEx is a capital allocation priority and will continue to be disciplined.

Q: Lucas Ferreira asked about cash distribution to shareholders.

A: Guilherme Fleury said they are continuously reviewing intermediate dividends, considering cash in hand, dividends, and buyback.

Q: Guilherme Palhares asked about Argentina market performance in 2025.

A: Carlos Lisboa said positive about Argentina's future, economic indicators improving sequentially, industry improved sequentially, market share stable, continuing to invest in brands and build portfolio, confident to lead and shape category recovery.

Q: Leonardo Alencar asked about cost guidance.

A: Carlos Lisboa explained Brazil industry production declined low-single digit in Q1, Guilherme Fleury said maintaining cost guidance of 5.5% to 8.5% for the year.