Q1 2021 Ambev SA Earnings Call
Such as a fintech and marketplace appear and this new operation model, providing a complete experience for our customers.
This is only the beginning of the transformation.
[noise] for World has changed and people are connected.
Customers have more options. So we brought b I.
Our new B to B platform, providing tools and information to make our customers' lives simpler their decisions smarter and their business more prosperous.
He believes and commercial relationships and partnerships based on mutual benefit and and foster and connections that allow everyone to growth available 24, seven and fast and reliable with fees, it's possible to place orders whenever it's convenient and supported by algorithms that develop our portfolio of assuring the.
Correct visibility for the customers.
The customer is able to request any support for the platform check order status and ask for financial services and solve operational issues there.
This is all being leveraged by park personal lives digital communication. All those features increase the interaction time with our customers and allowing improvement and the role of our sales team changing the approach for them and sell in to sell out improving our service level and developing our brands portfolio and the market.
To build a more effective transformation, who need to make our sales team empowered transforming the sales reps into a business development representatives empowering the front line to address our commercial strategy.
Other important evolution is the hyper segmentation for develop our brands and specific VIP customers and we review the role of our back office team that is constantly evolving and centralized and automated processes and our customer experience center, reducing friction and our response time for the market new opportunities for our business.
Such as a fintech and marketplace appear and this new operation model, providing a complete experience for our customers.
This is only the beginning of the transformation.
[noise] for World has changed and people are connected customers have more options.
Good morning, and thank you for waiting for it.
I'd like to welcome everyone to Ambev first quarter 'twenty to 'twenty, one results conference call.
Good day with first we have Mr Haisheng and restart to CEO for Ambev and Mr. Lucas leader, CFO and Investor Relations Officer.
As a reminder, a slide presentation is available for download and on our website.
Doug and Beth Dot Com BR.
As well as true the webcast link of this call.
We would like to inform you that this event is being recorded and all participants we released from old mode. During the Companys presentation.
<unk> remarks are completed there will be a question and answer session.
And at that time further instructions will be given true.
Should any participant need assistance during this call. Please press star zero to reach the operator.
Before proceeding let me mention that for looking statements are being made under the Safe Harbor of Securities Litigation Reform Act of 90 to 96.
For looking statements are based on the beliefs and assumptions and vans.
Management and on information currently available to the company for things.
Risks and uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur and the future.
Investors should understand that general economic conditions industry conditions and other operating factors could also affect the future results of Ambev and could cause results to differ materially from those expressed and search for lucky statements.
I would also like to remind everyone that as usual the percentage changes that will be discussed during today's call are both organic and normalized in nature and.
Unless otherwise stated percentage changes refer to comparisons suites.
First quarter 2021 results and.
Normalized figures refer to performance measures before exceptional items.
Either income or expenses that do not occur regularly as part of Ambev normal activities.
And as normalized figures are non <unk> measures the company discloses the consolidated profit EPS.
Beat and EBITDA on a fully reported basis in the Earth.
Earnings release.
Now I'll turn the call for silver two mysterious and exotic CEO for Ambev.
Mr. <unk> you may begin your conference.
For March for joining our call.
In February I mentioned that 2020, one would be a challenging year.
And COVID-19 pandemic was still very real.
After birth with voice and the deterioration of the sanitary conditions in Brazil, coupled with increased mobility restrictions, which impacted our people customers suppliers and consumers.
And the same time, we were better prepared this time around.
As a result, we delivered a great start of the year.
Grew EBITDA by 23, 8% the.
Driven by double digit.
And and double digit net revenue per hectoliter growth in Brazil.
And loss.
Consolidated volume were five 4% above Q1, 19 and <unk>.
We were able to get back to flattish EBITDA versus Q.
Q1 2019.
This was another quarter and we saw clear signs that our commercial strategy is working.
And that momentum continues.
I was very happy to see the strong performance of our international operations.
And Brazil continues to show that we are in the right path.
We delivered volume growth in eight of our Downmarket and.
And market share gains.
Some of these markets.
We saw solid net revenue per hectoliter growth in the quarter, driven by a more flexible and efficient revenue management initiatives.
In closing, our occasion base and promotional activities.
We continued to strengthen our portfolio as we launched innovations across our markets.
To name a few Gordon extra in Panama.
Bud light Seltzer in Canada, and microbe ultra in the premium segment in Brazil.
Love delivered strong volume growth in the core plus and premium segments.
With a great performance of Corona.
In Argentina, we have and the band and volume performance and the improved net revenue per hectoliter delivering top line growth of 67 per se.
Doug restrictions were partially lifted.
During the quarter that combined with the good performance of our above core portfolio and effective revenue management initiatives delivered top line growth of 28%.
Led by Dominican Republic, and Guatemala.
Okay.
Canada gained market share and grew volume despite a tough comp in Q1, 2020 growth was led by heart sell for and they are above or beer portfolio with Michael of Ultra and Corona.
Brazil beer volumes grew 16%, despite carnival cancellation and February and suffer and mobility restrictions imposed in March.
According to our estimates regaining market share while growing volume was in all segments.
With a special highlights to our global brands that had a solid high teens growth.
And promote the Promulge that continued its growth momentum.
And the health of the portfolio and improved once again in all segments this quarter.
And our digital initiatives continue to expand.
The delivery for.
Viewed 14 million orders and this quarter, reaching.
Reaching and all time high in March net.
Net revenue per hectoliter growth was strong again.
This growth was mainly driven by effective revenue management initiatives.
<unk> also had a positive impact as it helped true.
Standardized and increase efficiency across our portfolio.
Today, I would like to for the focus on Pes, our Super App for.
For our customers.
We believe that beef has been and boardman to deliver a strong commercial performance.
And then digitize our route to market.
Enables our customers to place an order and three clicks and.
Any time of day day and offers assortment selections for two box using algorithms.
On top of that beef offer other services.
Such as financial services.
It's scheduled for delivery.
Rewards programs.
And other products via marketplace, providing our food e-commerce experience to our customers.
Since our decision last year.
To launch busy and Brazil, we manage to rotate out true all our bdcs and wholesalers.
And a result, we now reach more than 65% before active customers in Brazil.
Accounting for over 550000 customers and we generated more than 6.5 billion and GMP.
Given this promising early results and to further boost the platform in March we announced that manual dot com I startup marketplace for bars and restaurants.
And that has been accelerated by ZIP back for the best should we use will be integrated into this ecosystem.
Today in Brazil, we offer more than 100 skus.
From approximately 31 partners and 380 cities already.
Reaching more than 5% of our net revenue in some of these locations.
Our platforms.
We will open many new opportunities for us to grow together with our customers and our partners.
Our platform scale, we opened Maine, and new opportunities for us to growth together with for customers and our partners.
Our digital platforms will be fully connected.
Throughout our operation and.
Great and with and leveraging on our existing supply chain.
Logistics and sales capabilities.
As our digital transformation and evolves, we will enhance each step in our supply chain and become more flexible efficient and integrated with our partners customers and consumers EPS.
Proving our NPS throughout the ecosystem.
And for the rest of 2021, our outlook remains unchanged.
And we continue to expect a challenge and a year.
COVID-19 is real and the relative.
And cost pressures will continue mainly in Brazil.
Not only thanks to FX, but also to commodity prices.
With that said I remain very confident and our people our capabilities and plans for 2021.
Overall volume was at Ambev continued its performance in April and net revenue per hectoliter performance will remain a focus.
Especially in Brazil gives them the inflationary scenario we are living.
We expect our top line performance should continue to drive our recovery growing ahead of bottom line as we work to get back in the for year two did normalize it consolidated EBITDA of <unk> levels.
Thank you very much. Thank you for your time and attention and.
And I will handle this over to Luca.
Thank you John Hello, everyone.
This time last year, our financial performance was marked by declining net revenue declining EBITDA declining normalized profit and declining operational cash flow generation.
What's worse, we were still in the early days of the COVID-19 pandemic.
What a difference a year makes.
In Q1, 2020, one net revenue grew nearly 28% EBITDA grew almost 24% normalized profit grew close to 125% and operational cash flow grew close to 84%.
Brazil beer performance was strong.
And the growth of our international operations was even stronger.
Just to put things into perspective, all these indicators are either at or above 2019 levels and nominal terms.
And in terms of outlook, even though COVID-19 is still around I believe it's fair to say that things are not as gloomy as before.
Quite the contrary, we expect recovery to continue as vaccinations pickup.
So I'm proud to see that not only have we navigated the crisis, well, so far but more importantly that the commercial momentum we started to build in Q3, 2020 has continued to translate into consistent improvement and our financial results quarter after quarter.
We have two big priorities on the finance side.
Number one continue to protect liquidity given the still volatile environment.
And number two improve our return on invested capital.
The team has done a great job since last year in terms of protecting our liquidity position, which.
Which remains solid and each of our markets, while still investing about $1 3 billion rise and capex in the quarter.
Most of this investment was directed towards increasing our brewing and packaging capacity, particularly in Brazil to support our innovation pipeline.
And the second biggest bucket of investment was and technology, such as our ERP integration and designed to among other things support our b to B and D to C platforms.
And in terms of ROIC Theres, a lot of work going into improving resource allocation as well as improvements in working capital.
But theres no doubt that one of our biggest challenges remain for the recovery of our profitability.
FX headwinds will remain as our biggest hurdle throughout the year, particularly in Q2.
Whereas one way package mix and commodity pressures should also be a factor.
In addition, cash SG&A was higher in Q1, mainly due to provisions for variable compensation, given the stronger than expected start for the year.
Since 2020, it was a zero bonus year.
Should our performance remain on track provisions for variable compensation should continue to impact our year over year SG&A performance going forward.
On the other hand, the stronger than expected top line performance should help offset higher SG&A for the remainder of the year.
And we will keep focusing on our productivity initiatives and typical financial discipline regarding cost and expenses management.
Yes, we will continue to work hard on improving our profitability, but we will not lose sight of the long term.
And the sense of urgency is there, but we have to be disciplined and stick to our commercial plan, which after all hasn't been working.
For us the name of the game still is continuous and consistent improvement of our results.
We have been on this improvement journey since the second half of 2020 and Q1 was another important step so there's definitely more to come.
Finally, a quick word on ESG and.
In June we plan to host a webinar to focus specifically on how we have been working to embed ESG into our company model.
And I hope to see you all there.
Thank you and now let's move to Q&A.
Thank you now and will begin the Q&A session.
Have a question.
Yes.
And to remove the question from list. Please press star two.
Our first question.
It comes from.
Marcia will rise with Santander.
Good afternoon, and good morning, everyone and congrats on the impressive results for first quarter.
And my my question relates to your market share trends person's abdomen. So you mentioned you you gain and especially in Brazil, where you gained share and all segments can you gives us and it bit of color on all the super premium and the premium plus core values segments, what's going on over there. Thank you.
Okay.
Okay. Thank you for the cash.
So yes, we feel that our portfolio is much more.
Prepared we went through.
Okay.
And John launching of new brands.
Resource location in long brand and that really will drive the future.
And.
And our performance of global brands and specifically they were.
Why.
And.
Double digits.
And most of the 20th.
And this is and this is what we believe it is.
All of the performance of.
The premium segment overall performance. So that's why we mentioned net.
And we have been investing for a while in Budweiser.
And Stella Artois and.
And more and more we are seeing.
<unk>, a very strong performance and we are seeing corona and doing very well with Shaw and Colorado. So this idea of our top five brands net.
We are really investing for the future and.
And they are really doing well, specifically BACS is growing triple digits growth.
It's going on the <unk>.
Colorado doing very well on the operating normal occasion true still suffering a little bit the bars.
And by doing it very well and on the Wall Street and on top of that we.
On top of market share and something that we are looking a lot now is really equity however, and that we really have to push equity and.
Of market share for sure.
And make it to make the pool and you build brand equity and brand equity of premium brands are really moving much faster than and the market share and and our plant. So and then that's important and API for us and we are very confidential.
Thank you Jim what about the core segment and any color on that.
Yes, so the core segment.
Since the beginning of the pandemic.
I had been that was a formation that they brought to you all that day.
Has been very resilient.
And and we have been.
And we reorganized and our portfolio, creating the corporate segment.
And I really launching.
Banking ovation and different backgrounds, and core segment and as the years of volume decline our growth segment was really market by and resilience with Brahma skol and of that Sam.
Families growing by high single digits. So this is the combination of.
And of the.
RGB and 300 ml bottles.
We are really focusing during the pandemic as the back that moms and Pops and bars can do that and the numbers can do the takeaway.
So so is important for Bart Thats net.
Really accelerating the core brands.
And and on top of that.
And normal price strategy that we have been we have been falling and sold our brands really bounces back.
And at the corporate segment.
And Thats.
For EMEA and they are really on fire.
Okay. Thank you very much.
The next question comes from Carlos Laboy.
Yes.
Right.
Yes.
And good afternoon everybody.
Congratulations on.
And really strong results.
I'm wondering what have you learned about Brahma Dupler mall Chi.
For this period and how do you drive that that brand going forward, what consumer insights have you gleaned as you.
As you sit back and reflect on everything you've learned here for what's next there.
Okay.
Okay. So thank you for the question and my Boy.
But on the locomotive.
David.
And that's what's really.
The brand net.
Debt.
That weighted to one year to develop.
It was really really fast and with all the consumer side, we had net.
And that really had really get superiority.
All of them.
Moving on very with the core.
And we get inspired by another categories. Like for example, we skewed that double wall and a single malt and everything and it.
It was amazing how the Brazilian consumer GAAP.
Steve with the desktop.
And two miles at the compliant.
And we were able to we need to develop and lead with that is it.
And really calls for bench and all the MAU and all day.
And just really quickly.
And it has a model and a great multi.
And all of this process are gaining light.
And for one year, we've been doing that and then we decide.
Really two first.
To best on the on the flagship brand. So we are really talk and that will ramp up.
Sure.
But im not going from Molla and Roma.
Emily umbrella. So we are really Brahma is the brand and but I'll, let luca.
Sure Robert.
And we went and overall debt so you really get.
In terms of resource allocation so.
And <unk>.
Cash on point, the Brazilian inflection point is more range.
We have true football and the cost review.
Please begin.
And exit from multiple molecules boosting for.
Uh huh.
A question point that we had and we have been able to work as a family and the good news is that Roma.
Speaking back and is growing together with relative from the March.
And that kind of weighted than we would.
Steve about some type of <unk>.
And all.
Oh.
Our family is really moving.
And I'm very excited about.
Thank you.
Okay.
The next question comes from Rob <unk> with earnest young.
Robert <unk> and staying with Evercore. Thank you very much and congratulations for a great start of the year.
A couple of us.
Sort of follow up housekeeping items number one.
It looks to us Lukas that you didn't reiterate the guidance on the Cogs being up 20%.
Is that correct or am I missing something and so.
That's number one to just a follow up on the Brahma <unk> Malte share question and that is.
I believe that got launched last year.
Biggest innovation you've had.
Where are the cops toughest for you on that launch.
So just kind of two housekeeping items, there and then and then kind of the bigger picture question.
It is.
How do you see the beyond beer market.
And business developing for you it was a big theme for Brito on the Abi call. Today, obviously, a lot of interesting stuff going on on that side and in Brazil and to get a little bit more detail on your thoughts on that as well. Thank you.
Okay.
Okay.
For the question Robert So, yes about the cash costs, our guidance was in low twenties for Brazil beer for the full year.
And so this quarter, we had higher than the full year, but it was already expected even the curve of the hedges that we have in Brazil for Q2, we achieved you'll see cash cogs above the full year guidance for the same reason, but we are not making any changes to this guidance.
Okay. So this is one.
The second thing it is.
But im a simple margin let me let me let me give you a higher view on that so what we are aiming is really to have.
ZIP line of innovation that really can't trust for my portfolio in the future is already been transforming the company sold one PPI that they should be.
It is what is the percentage of my net revenue that come from products that did not exist three years ago. So it was this number was 5% and 2019, it went to 10% and 2000 and Ics and we reached 20% each way and in 'twenty one and.
We are.
Looking at this number for us to continue this.
Is this strategy three with a strong view about where what are these basis, what's the one that we need to create as much just about any type of innovation. So we have a framework with five and we use that we Wanna lounge and mid day this momentum off 20% of our.
Net revenue coming from products.
Net is an industry and <unk>.
So one morning formation, so the tough comps and I want to promote and Pete.
It was really the Q3.
Yeah. It was really the moment that we are free trade loading and and putting everything on the market.
And but what we see it is that this number of innovation overall and should not change distrainee percentage that I went up well moving forward. So we have a pipeline.
They are they aren't gummy so per month with low margin do you have some geographical rollout and some new packaging and could just new occasions for us true true from work on that and and then there is there is one important product on on the core plus side that we had been.
And with <unk> and we are very excited it's really coming from each of the rollout phase right now there is.
There is one international brands have you said that beyond beer.
It's really something that we are each width.
We are very excited about our beef brands.
And the partnership with Fanista, we just launch it.
We launched and GT on their needs and then re launch and.
So Jack.
And there isn't this family of brands that they are very accurate, it's very incremental and doing very well and we have three or four pilots.
Have any right now.
And for us to learn and they decide.
The actual launch so we are investing our sales force we are in the vital phase we are testing Mike's hard lemonade there is something there is.
With this.
And we see and natural for acre and we are testing.
Nancy cocktails and cans. So there are.
Own beer, we have like for avenues that we are on for speeds on beach and we are on the pilot phase and on the other three.
And then just to add something here on our international operations Roberts beyond this year is already a reality and Canada for instance, and the quarter.
Shows a very good results yet again from our beyond the airports folio not only thanks to neutral right, which we we partnered with last year and showed consistent growth throughout last year, but in the quarter, we launched in Canada Bud light Seltzer.
Early days, but off to a very good start as well so I think thats one additional benefit that we have to be able to learn from the Canadian operations.
And and rollout these learnings to other ambev markets.
Yes.
Sure.
To give you a little bit more information and Robert So you'll know that we acquired a winery in Argentina last for years.
True views and have the capability.
<unk>.
And with Grace with winery so.
And that in Argentina and all.
Is growing 16% 16, one six compared with <unk>.
What we bought and now we are really building the capability of putting wine in cans and we need to expand from this across the board.
In California.
Okay.
Terrific. Thank you very much.
Yeah.
The next question comes from Thiago Duarte with BTG Pactual.
And.
Good afternoon, everybody I have two questions on the revenue per hectoliter and beer, Brazil, and then a third question on the brand.
And portfolio.
So the first question is can.
Can you can you talk a little bit more about how you manage the decision on the discounts in the Brazilian.
Beer division since the third quarter of last year, we've seen discounts coming down considerably and that's certainly being a and important push to revenue per hectoliter growth. So just wondering.
And how you you you know what what are the conditions that allow you to more aggressively cut back those discounts during the pandemic are when it comes to channel package and the competition changes and the pandemic brought to the business. So I think it would be interesting to hear.
And the second question is a free as we look into the revenue per hectoliter growth and Brazil beer 12.
12, 6% year over year can you help us break it down in.
In terms of you know some.
Some of the main impact that you had on a year over year basis, I'm, specifically looking to hear in terms of the impact of the carnival for the lack of carnival and with this year and the digital initiatives such as ours and.
And DVD and entities and it would be nice as well.
And the third question, Joe You mentioned in your opening remarks that the brand health of the portfolio has improved across the whole portfolio.
So if you can elaborate a little bit more on what sort of metrics youre looking at when you make that statement and how your brand preference and stack up against market share in each segment that would be interesting too and thank you.
Okay. So let me give me one minute for mutual growth.
Paper from a true diagnostics.
Net.
The second one is breakdown by driver net revenue per hectoliter for circle and the third one is brand portfolio elaborate.
Power versus share by segment, so if I Miss something and last year, we go over it.
And so.
Yes, so for a while I've been mentioning.
Previous quarters.
That over the long run overall prices should grow and language and inflation and then we are talking big time here on Hong Kong.
Shelf prices.
And then close and minor as you have efficiencies and discounts you have brand and channel mix and then we have the impact of our portfolio strategy and mainly through innovation and pesos is are things that.
And that we break it down prices like that and we have been much more.
And our flexible and nimble agile and in terms of revenue management.
And we'll react to market conditions, and the middle and then a stool. So channel is a really changing and different what's growing store transformation going on that you have to support.
And so we really win deep on revenue management and specifically this piece of of discount.
I think something's happened first of all this is helping us big time, okay. So granular.
We have a big chunk of our volume is already two b's.
Okay. So we are kind of more or less concentrated and building for everybody to have some onset true to the return in terms of discount. So we are trying to get this and it'll be.
With more standards and and we were able to to to make it. So we really move this vision of a lot of discounts to three <unk>.
To a much more.
Discounts for connected with say allowance and connected with for occasions. Okay. So so we are really with my strategy.
For example, but I'm not Super March so the promotions should be correlated with barbecue and it should be the discount and business specific Caucasian and all and for all of the profit. So we are really narrow.
The brand building, and and expanding and occasions, and and giving discounts on that direction that is helping us would be much more effective for is also district themes I would I would say that day or the drivers for us <unk> upgrade our discount management and hour discount.
Okay.
So talking about brand talking about the brain.
So the metrics that we are really looking each with is really power.
So it's that combination and so it is that profit off.
It's more than preference because it's a combination of is a proxy for that market share of future, Okay, and and we have a big Butch for Ya.
And we decided to kind of really elect <unk>.
Inside the sports for you recharge it brands that we are really concentrate at for for that long for important and reach you become to become leaders and we have with the strategies you're free all since we've eaten and bad and bet on some Brent.
And we have been able to drive the brain that would be the and that do we need a few and the future big time. So it's so if we are very excited that drove and but I'm a little marches leaves and there we will get greedy and brown, what you'll gather we're excited that's coal kind of stuff a line.
And at some point, we buy mission is in terms of volumes will be understanding and turns off.
The branch by true and then we have the premium business as I mentioned before that so it was the combination of that fight for and that I have they had really moving ahead of my market share so really.
Back that link very helpful and attitude and burial for over so when we put this seems oldest seems together. So we total porch for you of API is is gaining.
And this metric that we are looking there is powered with a focus brands really gaining even more and they will in the Greens that we were suffering the best day.
Kind of of the line and so visit this type of equation all day, and we do that for <unk> that we have seen the market.
And then childhood and this is valid across segments and also if you look at the film since last year and not only the quarter performance right and brand building takes time right requires consistency and one of the things that were C is really this gradual.
Right improvement in our branch power.
Cross segments for the portfolio ever since last year.
Perfect. That's that's very helpful and and as you just one one part of one of my questions is it is it fair to say that the carnival.
Should have had the and in fact in terms of how you translate revenue for Hektoliter and and your for your basis.
So so if I have carnival I would have a net revenue black believe that this loss and.
And that so that's the question.
Yes, let's let me see I.
I think if I had carnival I would have a mix.
Packaging and it was worse than what I have to day, because it's more concentrated on all weekend. So I don't see and in fact on the price insight if I add carnival I would have something around one medium.
For me this off and selling and the market I think that that's that's how we should approach.
Bush Carnival.
Yeah, that's that's a good exercise and thank you that's that's about about price and more about package and weeks.
Thank you.
The next question comes from Marcel Ikea with <unk>.
Hi, Yeah, Hi forecast. Thank you for taking the questions I have two questions uhm fires eighth about pricing listening Greenville at a b a com trying to color and there he mentioned about price increase <unk>. So my first question is and she could elaborate.
And the beat on your pricing think channel and the magnitude over to come and quarters and a lighter for recent commodity cost pressure, but I also and light off the commodity costs out to look nice next year.
And that will be my first question before I would like if I'm moving to the second one.
So and so brutal brutal mention this oh, marcella and as we have been nation in and produce water.
Look over the long run overall prices should grow in line with inflation.
And I'm talking pretty much about shelf prices and then on top of that you have the discount and they're gonna flip and might've sprained and channel on Thursday.
This reference of shelves that down on their own from should grow with with your television and.
And and and you know that we have been very flexible and nimble and and <unk> no way to react for market conditions.
Where we can go and and move back and or or.
And Steve. So so we are really taking every opportunity that we can but.
Redo something there is very from.
And and and go ahead and get that.
I would say that we cannot call with one price and moving forward I would just call him and that is this scenario. That's we're leaving in Brazil as a more inflationary scenario that we have to understand that's that's that's got force.
And then we have the best and look and hear Luke I'm really looking to the consumer I'm not looking for my specifically for my cough, Michael I already and my Cogs cash call cause I gave the guidance already I'm talking that really about the best of both the consumer and the inflation that we have over there.
And how we are we get better prepared for that okay. So I cannot home and much further than that.
That we are in a stationary scenario.
And they'll say your information was smaller than it was right now and we have to find the way too true I just ripped.
Alright. Thank you and my second question is about the F. E M. A and you mentioned on the outlook for T V here and now from it in the call and that you expect higher SG&A because of the bonus provision right. So just to understand and if you can come and something about be out to look out for.
This increase for for these line D C and you see it should <unk> what can we expect on that thank you.
Yeah, Hi, My style and this is Lucas thanks for the questions and.
So for for SG&A in Q1, the biggest impact was indeed, the provision for for bonus Okay based on our stronger than expected performance to start the year should we remain non track or ahead of our expectations from our budget perspective, we will continue.
To accrue bonus provisions throughout the remainder of the year, so that and it's it's it's reasonable to expect some additional right higher S. G and a as a result, okay. The second biggest impact that we we are seen so far this year is regarding distribution.
And expenses and that's mostly a function of volume growth right. So as one and grow our variable logistics costs also tends to grow the good news. There is that there is there's a benefit and the thought line and the net and <unk>. It's a net positive at the end of the.
The day, Okay, so the higher SG&A and the distribution side.
Is compensated is offset by the improvement and that revenues and finally, the third bucket is a sales and marketing Q1, there was lower sales and marketing first and last year, but this was mostly due to phase any articulate and the and Brazil as a result of.
Of the restrictions that came back and March so, we obviously had to adjust our sales and marketing and given that restrictions were and place.
So going forward as we recover as cities reopen and.
And beyond trade recovers, we are going to adjust our sales and marketing spent according okay.
Okay. Thank you so much for a day.
<unk>.
And the next question comes from Lucas Fajita <unk> back would you P. Morgan.
Hi, Yeah, I definitely collapse on something else I have two questions for him.
<unk>. Thank you for that can call and 100 and and forward looking statements.
The first one and you guys mentioned that.
You've already coming occasion thrown into the free pandemic EBITDA lights, and I also needed to tell the 19 and number for instance.
But I assume that your profitability and excuse me back about my my question is is there anything structural that you've seen things is free and the.
And and then, especially and the cost structure and the too bad and the phone.
And that's wood wood and bear you and to come back to the free from them and kept profitability and 2019 diet and maybe about margin from wrestling and 42% of for you is there anything that you guys think that would be 830, and you can return to this level and Easter for sons, and considering the the price and followed consider.
And let me open that you've seen and right now we've got a ready and vision, but this could be seen some point at some point in paying the price you in the future. So that's my my first question and the second question was around the same topic and looking at the second half of the year.
Gotcha, alright, great and the Guy.
And for the cards per Hektoliter and I would assume that you can <unk>.
<unk> and the first half of the new <unk> New cards go ahead and submitted this off between 5% from standard so.
In terms of for <unk> margin comps I've seen India second half then for the task. Thank you.
Yeah. So let me check with this one and then looking for.
And can help me.
So.
And the midwife up and then okay. So this is I think this is for.
And what we should talk about.
And at the beginning of last year, when we solve this scenario.
A bar shutting up parclose mobility restrictions and some expanse from.
For sometimes laugh so all they seem to have any.
We brought.
So we went to this vision off transformed the company to go where the future.
<unk> 15 definitely has been <unk>.
And the pandemic, but really accelerate towards the future and I've been mentioning that so I want to be recovered top line on V and I really wanted to recall and we can.
Rover volume for for the Big Boys and that we had and lab and 12 and 14 that'd be lost and meet and Hektoliter from that point on and.
And and and we are being very consistent on that day is looking for and you <unk> that consumers I know I know, having 100000 more customers that I had before we were very happy to develop this relax at home okay.
<unk> with forward brands that that something really the future now it's something that's more develop and mature market. So we were really with this mindset off let's get back and see for the the bottom line that we had at some point in time and and really left followed.
Okay. So what are you <unk> today.
Is that so we are we are cool simple and that we are very proud of all the things that we achieved on the top line fight with C momentum I think it's time for us to go back and say for book, So if that Rico four day recovery V off the bottom line. So.
<unk> when would we make it and and what it makes it is time for us to look at the of the bottom line that we had before the pandemic and.
And match it so I I really don't see nothing is structural beds.
We will not Baker in this journey <unk> the top line grow with the online and growth.
In terms of with this.
Perspective of tape, and then making and with this journey.
And we really decided to do one first one.
For it and then they August.
The next step we will read it for you to talk about the margin expectations I think wouldn't use it is.
Really if you look at how we are for one big box that we are suffering with this margin for interaction is really the day.
<unk> and <unk> and if you look and we are and 50 per cent of my costs B R E and dollars with.
Affects related and and and and the currency that I have a 2021.
Yeah, I mention that before and it's five 530, I'm and I'm <unk>.
<unk> is the year.
Disconnect with that guidance that I gave a flow trays and cash calls so it's 529th would be more specific the effects that after the if you look at the market for a day. So this is exactly fits that day.
Effect.
We have two day, so looks like this problem that I am having two day, it's kind of stabilizes on this level of 529 and that is already and might be so so I don't see and on.
<unk> exactly nothing more structural and that for Ya.
This site to two annual everything on that and and I would not have a problem with that thing that I'm Gonna do and then we have the commodity that we just pick it up I need a short term, but we really have to understand how this seems are going to drive two.
234 will be for the.
<unk>, that's Z as I mentioned, we understand as inflation and every scenario, we have been Nemo and Ah <unk> for us and we need to get all the options that we have and will be going to that momentum of our top line I'm.
Moving forward.
Thank you so I just.
Eight three and six and the second point that and see the the second half a margin uhm <unk> consumer and.
And the level for prices and.
And considering the you know the other day cause guys and Panama and scheme for the first half.
Yeah, So Lucas S. As I mentioned and my and my opening remarks in terms of cash cost per hectare of either for Brazil beer price, which is the guidance.
We we anticipate that the pressure will be greater right in the queue too. Okay, followed bye bye bye and kind of less pressure and the second half of the year. Okay. If you take a step back and look at the rest of the P&L right just.
If we if we if we go back to our performance during 2020.
I think it's you can you can you can see that recovery.
Driven by the top line was very strong and the second half of 2020, which means that we have a tough cop in terms of stock line going into the second half of the year, Okay and as I mentioned before SG&A, we do expect it to be higher primarily.
Due to the higher provision for for variable compensation.
Great. Thank you <unk>.
The next question comes from Isabella someone afterwards bank of America.
[noise]. Thank you very much very much and looking for for the call and for the question.
Can.
Can you can you read that the range of yeah. The the soft drinks now for.
Oh and also how the back and cause pressure.
I'm on that line of business and <unk> and and if you could give us a little bit of muscle or baalbek water and you gave for P. M that would be.
There are helpful and also on the international part online and.
Top line performance and also be looking for <unk>.
But the the measures in terms of restrictions and we'll put that has been more peppy more volatile right, how how you're seeing the the beginning of two two and and the evolution for all the and yet.
Okay. Thank you for the question, our and that performance and.
Volume overall, it was a group Miss <unk> one change for you one so we have a 0.8% growth.
It's really so weird for you we have a lot of restrictions important occasional and the soft drinks is really this on the go and.
And so <unk> really connect with and that'd be industry and.
Limited on that but even though we were able to get.
Two slightly two volumes.
Rams is really one of non batch for it's coming back.
Getting.
There for months better and it had before so could remove good.
And and just reeks. They are they are doing good to talk about the does it for me.
And which for you and and all of this partially offset and by the occasions.
Meeks there is a for the for the possibility of salt free.
For the smaller and fix the channels the <unk> ebay and.
It's.
It's better than than than we expected, but it's still not not there and we believe that we will get better and the the vaccination and moving forward and then the restrictions and goes down.
Okay. So this is this isn't that when you're talking about cash.
Yeah, so lots of us when we're talking about the loss. So lost loved was by for from Florida for US It was a great performance.
I believe so we had we failed the restrictions Moore and Brazil on March we are feeding restrictions cheetah now and it'll be from faraway true when we go to Argentina.
So fucking overall bulk a bulk line so we for the source performance on Argentina Chilean by Y.
Maybe driven by corporate us and premium segment.
Gaming.
Market share E E.
All of this country, Argentina television and <unk> for Lisa is a is a place where we for you you under pressure over that you're why true, but 32 and cheating, but I'll go ahead with available and performance. Yes, we saw some restrictions moving forward over there and.
But and just see fluids like they've been and make it comes and goes so we are excited because.
We made we.
Had some important changes over there and there is Chile is really been we have a structural change new combination of partnership with Google for there, there's really bringing us from different capabilities and possibilities. So it's really something that we are and <unk>.
Be excited that we are able.
Be able to gain market share and the only trade segment that something that we have been struggling and the best to do so avoidance very strong we're very excited.
<unk> see that works for you, it's really really for is stronger and busier, we worried which would be so the government and all the things we have been more.
More flexible with more free though for assured one day revenue management cycle and discounts and everything so structurally I believe that I'm and I'm really excited about loss.
And pandemic, yes, we saw some restrictions, but it's it's something that it comes and goes for Ya.
Sure. Thank you.
The next question comes from which one slot sweet.
Alright, and good afternoon, everybody and thanks for for taking the questions I have two two quick questions. The first one you had a very interesting discussion on the on the discount and but it is interesting and you said that you're using your online channels, two two and hands.
Your intelligence and Friday, and I, I imagine that especially for the D C.
You've been getting a lot of intelligence from the unemployment consumer so if there's anything G and that you could share with us regarding consumer behavior trendy and.
Possibly and capacity can <unk> you to absorb for your price.
And how they connect to the recent change that you've been seen like the fact that brings itself and in the bathroom and out stable items. So anything to connect you with this consumer behavior that you can you can share with this would be very very interesting. So that's my first point and in the second point and you can talk to a lot about you already talked about the <unk>.
<unk> the cost for the rest of your very hopefully almost halfway through the year aluminum price of <unk> and have been going up. So we can talk about any initiatives Oh boy.
Apart from the from the Levy management that you've been doing two maybe mitigate.
Well. Thank you will cost correct, you're going to next year.
Be very interesting as well thanks.
Okay. So let's talk about consumer behavior and revenue management first so so for somewhat friends. So we have seen.
See the building home consumption and and so it's really so how true.
<unk> and they make what's really about how to <unk>.
Occasionally and consumption and so that was.
The most important thing for us too and I think we we reacted very fast and.
And we have a lot of learning this on that we know that the bill Cajun email and with more about relaxation is more about Mondays and Tuesdays and frequency.
Much better than than before that was very concentrated and not be more and more.
Willing to like watching television livestream relaxing. So this is a <unk>.
For us should we and you'll have to connect brands and out and rush market and be for.
Ross the bowl and dislocated and so we are working and the modem and desks.
We know that consumers.
<unk> it's.
<unk> everything is and it's.
And so she was a really looking for convenience we'll be are fine.
Locally so they are fine and bonds and box closest animal D. N e-commerce and that is Avery. So they are months that box and bars and they are trust for me.
And you'll become small Baker.
<unk> supermarkets off some things. So there is this thing that we are that's for example for each channel. So we are betting on the and RGB 300, and male models and the back that we can.
That's leaving that.
<unk>.
Oh occasion for all of the bar and months and box that they are transforming so so if they cannot delivery. They have to have a takeaway strategy and the strategy is really working very fine because we design it'll be back as I look back for for us to do.
And that so the price point is designed for that we're doing both of the box and places six for those for 12 re is so simple.
Good price points for six.
And that people can can take their customers are we adopted because they need the stake away because.
And they make truly day open and growth of the info for the for people to Jamaica way. So it is something that is really working from our side. So set and easily I don't have to mention again and we have been spoken a lot about it. So it's really about convenience and something bad from that we know that there are.
Two oh occasions.
And we are developing too there is this this thing about.
Senior tour beer.
And we have a strategy that and discipline Gaza, where we have like a senior tourists that for the for level for the whole year. That's say price. This number of beers every month. Your home. So this is we have the best and <unk>. This is exploding in Argentina is really something.
<unk> got traction and so is that and even stronger and year Symphony is stronger and in Argentina. So we have to find the value for position the prices for that and we are developing asks for.
For pain free Lonely bodies and it has multiple does that believers of upbeat body that you won the discount for big So we are really working on on on the mission and it'll patients that are and they will buy acknowledged for us really to be to be ahead of time on that so all this learning and all that.
Technology does we have we are best.
Best and this time to to be ahead to be <unk>.
And talking about talking about offset costs of commodity just kathleen.
Yeah definitely.
And.
[noise] and wisteria.
Yeah. So so.
So.
As anticipated. So this year was a year that we faced.
Transaction and effects Halloween given the depreciation of real 50 per cent of our calls and it's all right and now we have seen this commodity just that is something that this.
It's coming to the table.
Things that we are doing are very consistent and is re up all this to not to lose this momentum the volume growth and <unk> is really something that help us. This time, a sweat day assets and have a better VLC and logistical up and have a better operational lab.
Originally and the voice go up so I'm really we are really excited about more towards the end of the year about the vaccination that is really something that we believe that RGB is 600 and email photos and the socialize and out of homework Asia and it's really something that that will be back we are free Berry.
For that so it with.
<unk> some some new for you we're gonna have around that if we are we are from which brother b as of fly and so the prices.
Or will sad that we have prepared for when this moment happen. So dizzy location strategy that we have that is really like driving mix and prices through new products. So this korcula the premium for for you All day Adjacencies So uhm.
<unk> could hear about the Carnival E Carnival I sell a lot of that.
Products that we have that at the beach.
That is so crazy for the whole way so that brought US is really designed for for bodies and the neighborhood and.
And it's kind of so dislocation big bodies outside the advances is the breath and and we believe that if it doesn't come and cute for it to come and Q1 of the next day. So this is location vision applications admissions are helping out and we will help us be time, and we and we will not real werdegar so financially.
<unk>.
And it still there around cost is around cost Sarah expensive. So the key fix it really about strategic investment. So we're really concentrating carpet for the technology. These on the foot free for us to.
To really hurt the better service possible for customers and consumer. So this part here and there is a lot of learning because consumers are really paying for convenience or b b and the <unk>. Our customers are beginning to pay for more days off delivery as a service. So we so.
Understanding this missions and this demands we are really being able to have some additional.
Revenue one services, okay. So that was pretty much it that.
That I <unk> that I could nation.
Wonderful mortgages mitigation.
Great Great day, and thank sneaks for the call.
Okay. So I think that was the last one we have a war that was the last one I really want to think.
First of all my team that is here and working on that for working for Ambev. So she was working very hard to have this this water for for one day <unk>.
Right up and damage to achieve his results do you have a great Stark and Ah.
Very challenging environment I also want to thank you all day analyst every everyone who joined.
The call for the time, and and a nation and to wrap up and I'm really confident and hopefully future for some reason and so we are we are and the F. A a.
Very good commercial Nancy and I think this has vehicle for one quarter by four and a here with you all not only Brazil, but we are really picking up international durations like Argentina, Chile, we have so excited about Chile patch, we are beginning to see that once the vaccination and.
New with is really moving forward until this summer and <unk>, it's already with the hotels are already booked and every day. So yeah. We received this momentum and.
Not just and Brazil about international operations and I'll go first formation feedback on technologies that we as we day fine and then you've I always remains John and should we can see contributions willpower digital if fr. So it's like bringing a lot of possibilities for us.
And they leave for is doing great. So we have and not that and sports on that time. This portfolio is stronger awkward for as much better than it was like two years ago and.
Hi, and brands are really.
Gaining equity <unk>, Colorado.
Very well, but otherwise it is because of <unk>.
Important for US that's for all we true so we see brainpower the call from the segment, that's what's on and see that we get it right and what if what you true breeding you and use on the AD for fangled patient pipeline and and what.
Listening definitely don't talk that much but cash generation.
It is recently and there is really structurally solid and.
<unk> because we have been prepared for that this channels somehow they they help us on this for work and get those for my kitchen and Araceous, It's really solid when you left three years and this year and we.
<unk> two first from the company and your best ahead.
So that's it. Thank you very much. Thank you Oh and do you think you would need.
And such with with Luke and the team and and we can continue the conversation.
And best Fresh water 2022 and results conference calls concluded.
You May just connect her line just for one.
And have a nice day.
And what I'll have to.
And Ah, Connecticut.
Customers have more options.
HM.
For you to be popcorn cause I don't cause and information to make our customers that simpler service goes and smarter and they're paired with more prosperous.
And <unk> and commercial relationships and partnerships based on mutual benefit and and fast and connections that allow everyone to go.
A very about 25000 fast and reliable.
It's possible to transfer and.
For mother's convenient and supported by algorithms that can help I'll pass on you for sure.
For the correct for for therapy for the customer.
The customer is able to request and and support throw the card for sure.
For color status and ask for financial services and solve operational issue.
This is often leopard spyhop personal line, let's go for communication as and see.
Teachers, and Kusel and traction time with our customers.
And a lot of improvement and the room and myself.
And the approach from south and to sell out and prove.
And our service level and developing a branch portfolio and the market.
For both of them a sucker for transformation from a hamster.
T empowered transferring the service to a business development records.