Q4 2021 Ambev SA Earnings Call
With the power of transformation, we generate new connections. So we can dream big for a future with more reason to celebrate together.
Okay.
[music].
Yeah.
Okay.
Yes.
[music].
Good morning.
Thank you for waiting.
We would like to welcome everyone to beds for quieter 2021 results conference call.
First we have Mr. Yan J dispatching CEO for Ambev and Mr. Low cost leader, CFO and Investor Relations Officer.
As a reminder, I fly the presentation is available for downloading on our website.
<unk> dos <unk>.
<unk> dot dot BR as well as good or bad because the link of this call.
With like choice for me that this event is being recorded and all bright Aesop and she will be in listen only mode. During the company's presentation.
Sure <unk> remarks are completed there will be a question and answer session.
At that time further instructions will be keep it.
Barclays Japan didn't need assistance during this call. Please press star zero share reached up her later.
Before proceeding let me mention that forward looking statements.
Being made under the Safe Harbor of the Securities Litigation Reform Act of 19 nine D C.
Arden looking statements are based on the beliefs and assumptions of unmatched many.
And then information currently available to the company.
They involve risks uncertainties and assumptions because they relate to future events and therefore depend on circumstances, they may or may not occur in the future.
Investors should understand that general economic condition under strict conditions and other operating factors could also affect the future results of Ambev and could cause results to differ materially from those expressed in such forward looking statements.
I would also like to remind everyone that as usual the person take changes that will be cashed in during today's call are both organic and normalized in nature and unless otherwise stated person to changes refer to comparison with fourth quarter results.
Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly.
Part of them bad as normal activity.
As Jerry Maguire speakers are non-GAAP measures the company discloses the costly stated profit EPS EBIT and EBITDA.
On a fully reported basis in the earnings release now I'll turn the conference over to Mr. Young Kid effect, you see you for that.
Mr. <unk> you may begin your conference.
Good morning, good afternoon, everyone. Thanks for joining our Q4 and full year 2021 earnings call.
2021 is now history, but it's definitely less it's mark.
We had an all time high engagement of our team, which once again rose to the occasion and remain steadfast in transforming this company to a new chapter.
We kept a very high reputation as we continue to focus on having a positive impact in society and growing together with our ecosystem.
We have reached our record top line performance with yearly volumes at a whole new level 180 million hectoliter.
That's 15 million hectoliter of new volume on top of 'twenty between.
And pretty much all the industry growth in the period.
Our normalized at the pizza with back to double digit growth in our ball pre pandemic levels. Despite unprecedented cost headwinds and we had free cash flow growing ahead of normalize it.
Improving our ROIC, while investing heavily in the future.
I want to deeply thank my entire team for this amazing year now lets talk about Q4, our main objectives in the quarter or two.
Consolidate our new volume levels.
And here, we grew volumes in the quarter, improving our rolling 12 months performance in.
And to position ourselves to start 2022.
Structurally better than we've begun 2021.
We accelerated our net revenue per hectoliter growth, reaching 15, 2%, which leaves us in a good place to start the year.
Breaking it down by region in Brazil beer, our volumes in the quarter declined eight 3%.
At a high single digit industry decline.
According to our estimates.
Therefore, we sustained it market share gains and we lead in 2021 both volume share.
And value share growth.
In fact, this was the second year in a row in which we outperformed.
What we need to see.
$84 5 million hectoliter in 'twenty 286 billion hectoliter each one each when you want.
In the quarter net revenue per hectoliter grew 9% and.
And we expect to prove this performance each way into 'twenty two.
In Brazil, Nab volumes grew by almost 2% in net revenue per hectoliter grew nearly 12.
Thanks to better packaging and premium mix.
We estimate we gained in market share in the quarter benefiting from a better visibility improve at distribution with B's closing the year with all time high buyers in history.
Our international operations continued to rebound consistently.
Latin America, South was our major growth engine with volumes growing almost 9% and net revenues per hectoliter about 31.
We had a solid performance in Central America and the Caribbean.
Volumes grew by two fives in net revenue per hectoliter grew by 16, thanks to our premium and core plus brands that are gaining mix ways.
Canada, we grew approximately 4% in both volumes and net revenue per hectoliter and.
Musical given Q4, 'twenty tweeny combine it with market share gains led by Corona and peak levels.
On top of that we are structurally better position to start 2022.
Our portfolio is a stronger and healthier.
For example, in Brazil, but I'm gonna local homology and Rama were first and second in Brent equity improvement among all brands in the market.
And we are starting this year with $1 6 billion more costumers that states that law.
One of our brands.
Also I would like to highlight the performance of Corona.
That is the leading premium brand in Central America, and the Caribbean in Canada in Chile.
In Argentina in grew 44% in volumes in Brazil.
Ovation is working with.
We tested more than 65, new products throughout the year, including beer and non beer products.
There is an avenue of growth in health and wellness with stellar gluten free and Michelob ultra.
Our core plus segment already represents 10% of our Brazil volumes.
After the successful launch of Brahma Diploma Archie Spicing has had a very good traction in Brazil.
This segment represents an enormous opportunity in all countries with altice origin, leading.
In Argentina.
Skehan doing very well with Chile in skull surprising us in Paraguay.
We are going beyond beer.
Beyond beer is already leased Barton profitable growth driver in more mature markets like Canada, where we have the mics in neutral franchises, leading the way.
<unk> 2021 to be ahead of the curve in our other markets, we stress our beyond pier capabilities.
We created a new business unit to bring focus and consistency to our strategy towards exciting new alcoholic beverages categories, such as ready to drink.
Ken cocktails and Celsis.
In Brazil, we had the beat strict shies broadening its portfolio and we continue to expand mics.
Our successful pilots in 2021.
DTC initiatives had step changed.
This is especially true for Z delivery in Brazil.
Not only in terms of geographic reach but also scale in the assortment.
2021 zero reached 300 cities delivered 61 billion orders and we begin 2022 with 4 million monthly active users.
<unk> bees is rebuilt ocean is in how we connect with clients in Dominican Republic and in Brazil.
We're more than 85% of our customers are already ordering online.
And of which more than 80%.
Majority of their purchases through the B's Act.
Also our offering of non Ambev products on the platform reached one 4 billion annualize at GMC in 2021 in total one base and this is just the beginning in 2021 we kick it off the exploration of <unk>.
This software as a service capabilities with the agreement with <unk> in Brazil, and we are speeding up BS implementation in Argentina, Paraguay and Panama.
At this time of the year last year, everyone was worried about the impacts from the pandemic the reduction in government stimulus the cost pressures, given FX devaluation and commodity increases.
After 12 months the results war, our volumes were up 9%.
Net revenues up 24% in the pizza growing 11.
We believe we adapted quickly in 2021, and we invested ahead to continue to lead in 'twenty to 'twenty two a lot has changed in the past year in.
In 'twenty to 'twenty, two we will remain almost.
Attentive and not let down our guard.
Because COVID-19 this is Joe <unk>.
We're going to see a lot of industry volatility.
Consumer inflation pressuring disposable income on the one side, but we are going to also see awards booked during the summer on the other side cost pressures given unprecedented commodity inflation in Brazil beer cash Cogs per hectoliter is expected to increase between 60.
In 19% and despite all that we would de lever consolidated organic EBITDA growth in 2022 .
Head of our 2021 performance with Brazil back to growth.
We are structurally better prepared we have a plan and our team is already working on it.
To finish I would like once again to thank all of our people for their great 2021, and four there's amazing transformation journey, we have been going through.
Thank you all see you in May and now it's over to you Lucas. Thank you, Joe and Hello, everyone.
Let's start with the numbers net revenue grew 16% in Q4 and nearly 24% for the full year EBITDA declined about 2% in the quarter, but grew almost 11% in 2021, which is well above 2019 levels. Even if you exclude the impact of one off tax credits in Brazil.
Normalized profit declined about 45% in Q4 due to tax credits one offs in Brazil, but increased over 11% in the full year.
And operational cash flow increased over 40% in the quarter, finishing the year more than 21% above 2020.
What's more our consistent improvement on the operational side also translated into better performance. When it comes to our value creation agenda with return on invested capital economic profit and free cash flow all back to growth in all of this while first continuing to invest behind our business transformation and future growth with capex for the year.
Totaling $7 7 billion, Reais, which is nearly 64% above 2020 levels and sales and marketing growing 15% to support our portfolio strategy and innovation pipeline.
And second returning excess cash to shareholders with a total payout of $9 5 billion reais in the form of dividends and IOC in the year, which was about 23% above 2012.
And in terms of sustainability 2021 was another year of consistent and continuous improvement and we remain on track to deliver our goals by 2025.
For instance, we announced the first carbon neutral large brewery and multiple AMT in Brazil, and we also reached a 100% renewable energy for our breweries in Panama, the Dominican Republic and Guatemala.
We advanced several initiatives to decarbonize, our value chain operations related to scope III.
And we continue to dream Big and we announced our ambition to achieve net zero for our operations by 2030 and for our value chain by 2040.
All in all we delivered a consistent improvement in performance, we have been so vocal about since 2012.
And now that we are pretty much back to pre pandemic levels on the bottom line and with 2021 behind US We must look ahead, so let's focus on 2022.
First what doesn't change.
One topline growth will remain a key priority and a key performance driver.
To input cost pressure, Unfortunately remains a headwind and three our focus on value creation drivers such as return on invested capital economic profit and free cash flow generation remain.
Now what should be different in 2022.
One our net revenue performance should be more driven by net revenue per hectoliter than volumes as we adapt to a higher inflationary environment.
Cost headwinds will come mostly from commodity inflation, rather than FX, but at a lower growth rate than in 2021 three.
Three SG&A growth should improve which was heavily impacted by variable compensation accruals and for the tax credit one offs in Brazil that positively impacted our EBITDA financial results and effective tax rate over the last two years should no longer impact our performance in a material way.
Let me give a bit more color on our Cogs outlook in Brazil, beer, which we're giving specific guidance.
We expect Brazil beer cash Cogs per hectoliter to grow between 16% to 19% for the full year.
This number assumes commodity prices remain at their current levels and does not include the per hectoliter impact on the sale of non Ambev products on are these marketplace, such as milk vegetable oil rice condensed milk and chewing gum.
Given these marketplace growth trend in 2021, and our plan going forward in countries like Brazil, and the Dominican Republic.
Starting in Q1 2022 earnings results, we will report our net revenue per hectoliter, our Cogs per hectoliter and our cash Cogs per hectoliter performance, excluding the impact of these non ambev products sold on the <unk> marketplace.
This is intended to provide more transparency to the market on this important growth driver as well avoid distorting the performance of the underlying beer results.
When we bring it all together what this means is that we will work to deliver battery a bit the growth in 2022, then the 11% growth we delivered in 2021, despite a tougher Q1, despite volatility by quarter and despite the cost headwinds I mentioned.
Turning to our financial priorities, we will focus on optimizing our business through three things first improving our financial discipline with a focus on liquidity as well as our typical cost and expense management initiatives, while reinvesting for growth organically and inorganically.
Further our value creation agenda with a focus on improving our return on invested capital economic profit growth and free cash flow growth and third return excess cash to shareholders over time.
Regarding value creation, we will continue to look beyond margin ratios and also focus on return ratios.
Margins remain extremely important but when it comes to creating value in a sustainable way in the long term asset turnover is another important lever and we see room for improvement here as for instance, our tech platforms continues to expand.
And yes, 2021 was still a tough year on the margin side, but on the return side, we managed to break the downward cycle, we were on for awhile.
In 2020, due the challenges to build momentum on top of what we accomplished last year.
So to wrap up.
Following good recovery last year, 2022 brings well known challenges, but also several opportunities we've been investing behind since 2012.
We believe we are better prepared and we will have to deliver once again, the continuous and consistent improvement as we transform this company.
Thank you and now let's move to Q&A.
Yes.
Okay.
Thank you.
Now, let's start the Q&A session for analysts and investors questions may be scanned by pressing star one on your telephone.
Yeah.
Our first question comes from Marcella.
That yeah the G suite.
Hi, Yeah, Hi, Lucas. Thank you for taking my question I have two questions. Here first one is if you could give us a little bit more of color on the main components behind the guidance that for them to get the growth affiliation to above around 11% level.
In 2021.
And the second question is if you have any assessment of it.
This should impact from price increase of volumes, so far and going forward right. We have seen that the industry is a highly focused on pricing for manage cost headwinds and I think that is also the case for you guys. So how are you are seeing that impact.
In terms of elasticity. Thank you very much.
Hi, Marcella.
Thank you very much for the question.
Let me get the drivers growth first.
Overall.
Talking about first about net revenue per hectoliter I think most of the the.
The price is.
Already done.
So we answer in 2022 with a good carryover.
And we are very confident on improving mix during the year.
Because I think the trends are in our favor as the old trade reopening the 600 ml bottles are gaining traction.
It doesn't help us innovation on the core plus and the premium is really working.
So that's part we are we are confident.
We mentioned that our in Brazil, our cash Cogs would be in between 16 and 19 that is better than the last year that it was in the low twenties.
And sales and marketing should be below inflation with our initiatives.
Going knock okay. So so I think so.
With this balance.
We believe that we can accelerate at visa.
Of course, the volumes and the industry are.
I think the most streaky parks.
We are.
<unk> with a very good market share in key countries. So this helps on one hand, we had the omi chrome impact.
In January .
But somehow on the other hand, it looks like we're going to have to have carnival.
One now one in April we're going to have a work up.
In the summer.
We never had those already impact it's a big.
Okay Jen for the Brazilian market, so, that's where lens a little bit more of the adults, but we are very confident that we are with a better portfolio structurally better brand equity going up and greater utilization of working in the market. Okay. So this is the first one.
The second about elasticity. So what we are seeing is really that when do you think about segments that the value segment has been one that suffered the most okay.
What we saw during the first and the last year. It was so our core plus.
It's something that is a structural change that helped and brink's.
New news new recipes for consumers. So this is so it's a it's an important piece of the market that is growing beyond any.
Historical philosophy is premium is solid and our core.
With the return ability strategy rebounded to grow so it's really been.
<unk> resilience, so I think.
Talking about segments, what's really been more impacted overall.
Is the value segments and the brands.
Does not have equities. So so from our side, we have more miserable and mainstream on core plus and high end so.
We are excited about our portfolio in general.
Perfect. Thank you very much.
Yes.
Our next question comes from Jerry so much somewhat the citigroup.
Yes, hi, good morning, Jana Lucas. Thank you for taking my question.
I wanted to ask about the revolutionary logistics to urban distribution centers you commented on this in the last couple of quarters.
And.
We understand that you're building it out in so Paulo, and other parts of Brazil, and also transitioning clients seem to be so.
For the ordering in area, 5% already there so two questions on the Super first is.
Then what do you think you are in this whole process. Because you know its revolution is a is a big word and I'm sure. It is.
A long involved process. So what do you think do you think they just started or do you think are about half way through or like you know if you can give us some color there and the second is if he could.
Frame the benefits in terms of.
Top line growth.
That's it.
And any cost savings that you might expect by transitioning to this.
This new process and if that if those cost savings if any if we're going to see them or would you be investing them in back into the market.
Thanks.
Okay. Thank you for the question says you, yes, so let's call we've talked a lot about it.
<unk> is an important piece of.
Our transformation journey.
Just for you to do you have in mind. So so what we are talking that the major piece is that ambidextrous.
Warehouses that they work for direct to consumer initiatives and they work for each of the initiatives together. Okay. So I think this is something that.
There is a game changer in terms of getting this right and really being decision. So we have.
Both sensors and around we have already.
Something around 40.
New.
We were born warehouses that can manage consumer and customer in the same platform.
What is raised about it is that our DTC initiatives you have 80% of the volumes that goes that comes the orders comes.
On Friday night Saturday Sundays.
In the B to B is something that is more plan is more weekly so it's highly complementary the initiative.
That will help us allow us to build this capability to reach consumers.
You have this capability to aggregate much more products that we that we have today that goes beyond our portfolio that helps our innovation, but really accommodate some partnership that we are doing with other industries. Okay. So this is really about capabilities.
This moment.
So.
E band It is something that we are just starting so the part of the question where we are is just the beginning.
And in for now.
So.
So did you see is really getting.
Uh huh.
More positive so everybody comments and ask about the DTC less smile and this is really a piece that will make the last mile of DTC a creative to us at some point in time for now we are really ramping up and we are just starting.
And for the benefits Jan.
Yeah.
So the phase that we are today is really about expansion. Okay. So this is really to get the PTC more efficient you'll know we know that delivery is not in the same level of margins that we had in the company. So it's like to mitigate this growth into get to see at some point in time.
The same margins that we have in the company. So yeah. So it mitigates the growth of DTC for now it gets did you see a creative at some point in time.
Yeah, well I guess, what I, what I meant to ask you was on the <unk> part.
There is the changing the ways our customers order as it does.
Probably.
Our sales uplift than some sort of a cost savings.
Perhaps fewer salespeople neither.
No less frequency than visiting.
Clients.
If you can frame those that'd be great.
Okay. So.
No.
A little bit disconnected, so delivery and order pacing. Okay. So that's why I'm talking pretty much about warehouses in the supply chain.
Talking about the broader perspective, so what we are seeing is that clients customers can be much more organized it with b's. They can relax. They can lend themselves were to receive so the athene additional money to have more more.
Oh in terms of frequency we are much more.
Efficient on discount optimization and management because of our data. So this piece is really these as media creative.
This discount management in organizing the logistics and if we will be added.
It is marginal to really with all of this platform to really have the partners in the same truck that we are delivering.
That we are delivering okay. So somehow.
Very good for the base business, the base business or get sufficient but then when do we aggregate the other products when we aggregate the marketplace products. It really something that we are talking more about about growth.
Of this piece of the of the equation of debt that we are best So we mentioned that.
Assortment that is a non ambev in beef.
Which is $1 4 billion in <unk>. So this piece.
Is already below the.
The average EBITDA margin of the company is growing.
In this.
Net profit is getting profitable with this.
Logistic approach.
Yes.
Thank you so much.
This is Randy is really getting more.
All the splits Gomez.
Thank you.
Our next question comes from Alan Leong something there.
Thank you and congratulations for the result, hydro customer journey I have a couple of questions one around the balance sheet and you're sitting on $3 billion of net cash.
What's your what's the outlook in terms of dividend payout.
Potential share buybacks that'll be the first question. The second question was more more around the market in the Super premium category.
Corona moving up 44% very very strong congratulations for that Heineken mentioned that there were reporting 10% increasing.
And volumes.
Could you explain a bit what's going on regarding the Super premium category why is it so strong again in Brazil and for the same token why or what the contribution in terms of margin expansion or margin contraction of the Super premium category in Brazil. Please thank you.
I'll get the first one island in the second ill get the second one I'll get the second one first and then I get to look okay. Okay. Thank you Jim.
Yes.
Yes, so the so we mentioned at some point in time that our long term view for their high end portfolio that we had in Brazil, which was really to have green the equity.
Ahead of volumes. Okay go ahead of market share rent built the desire connected consumers and we have been doing this for a while and it was a very successful strategy that we have.
Best of the year.
Somehow pick.
For major brands of our high end portfolio really got.
Power brand equity, Okay. So corona is doing very well established doing very well.
On the Brent brand equity size is doing very well.
And we are beginning to see demands.
So those brands. So we have seen corona it was a 44%.
We see banks with 59% up two.
Well Sterling relocated or region, our domestic brand was 35% up and this is up on in Egypt of our strategies to improve margins moving forward. This product they are 150.
On average all of it.
Average price of the market and they are accretive in terms of margins, but our main strategy to steel to seeds to have grins equity ahead of market share. For example, Corona has three times the brand power that it has in terms of market share. So there is a lot of space to you.
Debt on consumer pull on that as an important piece of our recreation, we add to that the innovation in the core plus there is another part that being a great business for us.
In our portfolio.
Yes.
Okay, Hi, Alan Thank you for the question.
A few points here in terms of use of cash the framework the mindset continues to be.
The same as the one we've had over over the years, meaning number one we want to reinvest in growth opportunities and.
Over the last few years I think we've found very attractive organic growth opportunities.
Either in our base business or in these new business ventures that we've been investing behind leveraging technology, so plenty of opportunity to reinvest the strong cash flow generation to generate more growth.
Number one number two north nonorganic.
Growth opportunities, we're always looking at interesting opportunities again in the base business in markets, where there's still white spaces or in these new new business models, new ventures opportunities to enhance our capabilities to drive the expansion of these of these ventures going forward. Okay. So that's.
Priority number one reinvest in.
And the future growth and then.
We will continue to return excess tech excess cash to shareholders over time as we have been over the course of the last few years right just to so to give a bit more color on this.
If you take if you take 2019 2020 in 2021 right what we what we ended up.
Doing was we had if you look at the.
The fiscal year Wright's total payout, we had roughly $7 7 billion.
Of a payout between dividends and IOC in 2019, and 2020 right reminding that 'twenty 'twenty right. There was a there was a very tough year, but we managed to keep the payout at the same level and as the business performance and the financial performance bounced back in 2021, we managed to increase the.
Payout and we ended up making the the largest payout.
If I I believe since 2016 it was the third largest total payouts in history growing 23%.
Versus 2019, while profit grew roughly 8% so the way the way we continue to think about this is as the business improves and after we've reinvested for growth. We will continue to look to return excess cash to shareholders.
And improve the payout over time.
The way to return excess cash to shareholders.
We will remain very much focused around maximizing the IOC as we have in the past.
Supplemented by dividends and from time to time, we will look at buyback programs, but that's a discussion that we have with the board from time to time.
For now the decision remains to prioritize IOC and dividends and this is a conversation more towards the end of the year for us.
Thank you so much that's very useful thank you congratulations again.
Thank you.
Our next question comes from George Gasper hate at J P. Morgan.
Hi, guys. Thanks for taking my questions. Some additional clarification on the guidance if possible.
Just wanted to understand how much you.
Do you think you could outperform the market so far this year.
So in other words, how much you see the Brazilian beer market growing in 2022.
And then just you have to have a view.
About this growth you should think it's going to be a bit more back loaded into the year.
Seems like your volumes declined in the fourth quarter and she can give the central for how the year's starting so how should we think about we can solve the beginning of the year.
Our full year guidance and the second question around the same theme here. If you can give us a sense of how relevant to both the needs of the <unk>.
I still believe that this results in 'twenty two so.
Welcome Stacy and Mike.
These market places already growing right.
Probably 40% from the last Monday by Google, which in the fourth quarter.
So just wondering if you can if you can oh.
It's going through a little bit how.
Yes.
And I believe they will contribute to this outperformance in 2020. Thank you.
Okay.
We get this one Lucas thank you for the question.
So thinking about I think.
We've talked about.
Yeah.
The lines I think that the trickiest, one is really really the volume right. So as we mentioned we are confident because.
We are starting with a good carryover in net revenue per hectoliter, and we started with a fairly good position in terms of market share are solid.
With returnable.
Performance really going up.
So we are confident that we are structurally better.
To address the year in starting the year with a market share much above that we started the previous okay. So so that's that's how we see that we are structurally better than starting the year, So having said that.
We had the omi growing back after the beginning of the year.
Last year, the carnival was already weak.
And what we've seen so we have seen a recovery in February but somehow it looks like we're going to have like half.
Carnival is just the holiday and then we're going to have another one in April because Rio de Janeiro in Sao Paolo already mentioned that they will have some activities on it.
And then we have all the reopening and then we have elections in World Cup. So somehow I think.
That's the most strict bars, so what it is.
Really it's something that we have to be attentive discipline.
<unk> flexible to add risk to address the industry overall.
I think that's the most.
I can mention to you would let's see no crystal ball on that.
Flows in mind that we have to address we are starting that position.
Having said that this is really about growth.
So this really helps the base business overall, okay, so, but when we talk about the.
The other assortment is really about growth. So we are building growth that delivery, we are more sizable already now and we begin to see efficient scummy.
As we get the last mile.
More efficient overall, so we are more and more doing two delivers.
In the same motorcycle so we are more and more getting efficient on on revenue management on that piece. So we see there.
More sizeable and really getting more efficient in pieces really the other piece.
Really about growth.
Okay. So I think that that's the most I can mention.
Yep.
That's pretty much it.
Okay.
Thank you.
Our next question comes from key.
Key breast lung BTG.
Hello, Hello, Lucas My question is on the cost outlook for 2022.
The cost per hectoliter in Brazil should grow the 16% to 19% you mentioned in Brazil beer.
And that is now mostly coming from commodity pressures rather than the FX is it wasn't the best so.
If you could just provide some additional color on how that could also apply to your other business units.
And also how does the outlook for revenues growing by higher revenue per hectoliter rather than volumes.
Maybe related to that in terms of potential price hikes that you see during the year. Thank you.
Yeah. Thank you for the question in here.
Our our outlook for free cash Cogs per hectoliter right.
Is in terms of the guidance is is really focused on Brazil beer, we're not providing any guidance with respect to the other business units.
However, when when we look at the commodity inflation right.
No no business unit of ours is immune to it okay and as we have the hedging policy in place right Rolling 12 months forward.
You can get a sense of.
The impact that commodity inflation right can have.
Across our other our other business units, okay, but just given the importance of the Brazil beer business to the overall performance of the company. We wanted to to provide this additional level of detail. So the market can can have a better sense of what to expect.
In the year, Okay, and could you repeat the second part of your question on the net revenue per hectoliter. Please.
Yes sure it was.
The the the go off of or at least the outlook of growing revenues, mainly by higher realized prices.
That implies that you see in the end a better environment for price pass throughs.
So mainly overseas you mentioned before that the.
Some of the price hikes should come from better mix and we have already a positive carry over.
But just thinking if we should also expect higher price.
Price hikes, then you can see a positive environment for that overseas.
Okay. So so outside Brazil, I think one of the one of the key drivers of our net revenue per hectoliter performance has been premium amortization. Okay number one so in that and that is true not only for our core plus volumes in markets like Argentina in markets like.
Many markets in the Caribbean, the Dominican Republic, Panama and also Canada, Okay and this is also true for our premium brands across these markets. So I think both in 2020 and 'twenty 'twenty. One we really saw this momentum building around above core Corp.
<unk> and premium volumes, increasing the mix and that has helped us on the net revenue per hectoliter performance side I think that's one of the major the major.
Contributors over and above the core pricing and as Jim mentioned earlier today on the call rights, we've pretty much started the year, where we want it to be in terms of pricing and so we count on this carryover to give US also a good tailwind going into 2022.
That's very clear Lucas thanks very much.
Thank you for the question.
Our next question comes from Asia, but I'll ask them one at the bank of America.
Thank you good afternoon, Jan Lucas I think the protocol.
My first question is on the volume performance by Mark, but more from a channel perspective, right. Both in Q4, and how youre seeing the beginning of the year.
It could.
Give us a little bit more color on the performance between the on premise and be off premise in Brazil.
The weakness that we saw in the industry, where was that more concentrated and then end up how.
Are you seeing the pace right off the on trade recovery throughout the next couple of quarters.
That would be my first question and the second question is it's interesting you guys mentioned it.
G&A relief right for airports chosen in 'twenty two.
Any sense of magnitude, Ohio should we think that versus inflation.
For the year I think thats good could be helpful. Thank you.
You can go you can take the first one I will take the first one on volumes and then I'll answer the SG&A. One so it's about I think of it that way.
So what we saw in Q4 it was a loss.
Lated with with weather.
This was a very bad weather overall, so we saw this industry deceleration on that far.
So impacting.
These channels equally and then we had the omi chrome that impacted more the entrees again. So so we have we have been seeing.
Structurally better.
Come back off demonstrates but they're normally grown I stop at that and then we saw the impact on the on the on trade again.
But Q4, it was mainly pretty much about the weather overall.
Believes that there's old trades coming back is more structural win omicron goes its really its really getting better we have seen their own trade overall reorganizing transforming itself to do deliveries to do takeaways of course, the occasion of gathering outside of home.
Friends. It is volatile so it was getting better it stop it I think it will.
Get back again so.
I think.
Throughout the year this should be.
Positives.
As <unk> seen all over that.
Previous year.
Overall, okay. So in terms of general we believe that the on trade and traditional trade will continue to.
Rebounds.
During the year.
This was pretty much it.
And with respect to your question on SG&A Isabella a few things here that I think are worth highlighting.
Number one.
2021 was a year, where SG&A growth was heavily impacted by admin expenses going up.
And within admin expenses.
There were a few a few dynamics that we highlighted during our Q3 call.
Number one if you think of the growth of overhead excluding our investments behind technology rights the overhead growth was actually.
Much milder and below inflation, okay, but since 'twenty 'twenty, we've taken the deliberate decision to right Overinvest in technology tools to build the future, Okay and that had an impact on top of the variable comp and as it relates to variable comp I think it's fair to say that the variable.
Copper accruals in 2021 we're on the higher end of historical accruals given that the rebound in performance was much.
Stronger than we expected right going into the year.
In 2021, so when we look at 2022 right I think the a good way to think about SG&A is less growth on the SG&A side coming from admin because of lower variable comp accruals right versus the the level at which we we accrued in 2021.
We will continue to stay very very disciplined around overhead growth right as we have historically been.
And but we won't be shy.
About continuing to invest behind technology, okay, but all in all a much better a much better level of growth on the Adam inside as opposed to 2021. Okay. Then when you go to sales and marketing sales and marketing in 2020 , one was heavily impacted by the comparable base because in <unk>.
<unk> 'twenty sales and marketing was was at a much lower level of give as we adapted to COVID-19 in Reits, we tightened the belt. So there was a tough base of comparison in that.
To a great extent.
Blayne is kind of the year over year growth, albeit below net revenue.
Net revenue growth, okay for the full year.
So sales and marketing I think perhaps the best way.
So just to have a reference as to look at historical sales and marketing performance in and use that as a reference though we're not we're not giving any specific guidance on sales and marketing for 2022.
So I would look at historic levels, Okay, as I referenced and then on the logistics side.
I think the one of the main impact was the increase in initiatives like D to C. Right that Jim mentioned that they bring the the last mile distribution costs.
We will still invest behind that expansion. So there is still some increase on the distribution cost side, but.
But nothing nothing to flag here.
I'm out of the out of the kind of or then the aerie expansion of the business. Okay. So all in all SG&A growing less than it grew in 2021 given these different given these different are these.
Different levers that I mentioned.
That's very clear thank you.
Our next question comes from Robert Ottens Bank Evercore.
Great. Thank you. Thank you very much first just short detail question.
Any update in terms of state or national taxes that that impact a beer in Brazil.
And then my main question really is on.
You know how youre addressing a total beverage alcohol opportunities in your key markets.
And in particularly spirits.
How how beer is doing versus spirits.
The plans that you have to perhaps get into spirits or address spirits occasions, with a more ready to drink products.
You've done some of that in the past, but like to get an update on where those initiatives are thank you.
Okay.
I can take the first question on taxes, and then John can can answer the second one on total beverage alcohol on the tax front.
Robert.
There's no real update I think are just taking a step back.
Our our view is that given how hard right Covid hits.
Our markets.
We think that.
Everybody needs to support the recovery.
And so in our view.
The the way forward right is to invest behind the recovery of the on trade.
For instance, and so to the extent, there's further taxation right that's going to increase the burden right on the industry increase the burden on the trade.
We think that's not going to be right constructive for the recovery of.
The industry as a whole okay.
But there's there's no real update since since Q4 on the tax front.
Robert Let me get the second one so thanks for the question on total beverage, let me start with something that we don't talk that much we have been building.
<unk>.
Across the board in Brazil, Argentina.
Uruguay.
And.
We are really excited about.
What we the foundation that we built this year. So we have resilience on the on that side, we are gaining market share Pepsi Black is really something that we are very excited about the taste is really something that consumers are our touring with.
Well announce actually is doing very well so in visa is really healthy for us to give more space for nabs. So this is the.
First this is the first thing I think it will be a strong year for Nab across the board in our in our company.
Because we build.
That was a year to ensure into one it was a year that we build a lot of things to help match hasnt.
Having said that so we step it changed this share of throat of beer.
Produce in <unk>.
<unk> 'twenty and 2021 it was a step change.
You've seen my volumes.
Somehow we get it right the location strategy and the affordability strategy on the mainstream on the core so we separate chain share of throat. So our categories are very resilient in Brazil in Argentina in Chile in our major footprints.
Really as a category, we really doing well we are taking the lead on innovating on the sizing there relative to price on the basket. So we are very excited with that.
Having said that.
We just put in place business units to go to think about beyond beer.
That is thinking about all the options that we have so RTG is really something that we are starting with <unk> in Brazil, Mike there.
There is always a soda that we piloted it is doing very well.
It's really something that we believe that we will have traction in our major markets and then.
Within this pretty much the spirits occasion, and then we are sturdy every scene and open.
On the all the alcohol alcoholic beverage, but it's it's easy to see how are we going to move.
So we put in place the capabilities to we hire ahead.
We're studying deeply RTG, we moved first and we are studying the rest.
Thank you.
Our last question comes from Gustavo again.
B B.
Hi, Sharon Little Cup highest warm.
Just wondering if we could explore a little bit more on the EBITDA guidance for 2000, and total true, especially trying to analyze the magnitude of the forecasted growth within different geographies. So we would be very helpful. If we could if you could help us navigate through a b adopt maybe often consolidated EBITDA growth across the business units.
So which region could increase EBITDA ahead of the consolidated ROE, which was Quebec, that's headwinds toward the consolidated work to meet your EBITDA guidance. So any color that you could give us mainly focusing on your international operations and how they compare with your EBITDA outlook for 2022 would be very helpful.
Okay. Thank you for the question Gustavo we're not we're not going into that level of detail, but let me try to give you a good way to a good way to think about it then and one of the reasons why when when when we project 2022 based on our plan kind of what are the reasons to believe.
<unk>.
That we were going to work towards delivering more than the 10.9% organic EBITDA growth for Ambev right at the consolidated level I think a good way to think about it is in 2020 one right. We delivered the 10 point to nine.
Organic growth year over a year with a bit of decline not only in Brazil beer and a bit the decline in Brazil.
Whereas our international operations in Alaska, and Canada, really really made a difference in terms of allowing us to deliver this this organic EBITDA growth. Despite all the FX and commodity headwinds that we face across markets, we still managed to deliver.
Good good good recovery in double digit EBITDA growth.
So when we look at 2022.
We see given the momentum and given that we're starting to you're better prepared right. We see a 2022 with Brazil bouncing back in terms of the bit the growth. So just by having Brazil bouncing back and growing EBITDA. After three years of decline right and given the size and importance.
Brazil, not only beer, but also now to the overall company.
That gives us.
That gives us confidence that we can deliver this improved performance and growth level for 2022, I think that's the main difference, it's Brazil bouncing back and growing a bit the in organic terms.
To add on that.
Sabo.
Central American Caribbean has been a clock right has been some steady Canada chew it has been.
Easy to predict lots, we are doing very well.
So the core pillars of strategy is really working Chile is really something that we are accelerating accelerated Paraguay is doing very well <unk>.
So in the end maps.
This is what I mentioned somehow we don't talk that much but I think as we would have a strong view and then we have <unk>.
Certainly.
Okay. That's clear thank you.
Sure.
Okay.
Thank you Q&A session is now closed now I would like to turn the floor back to Mr. Jim <unk>.
For final remarks.
So thank you very much. Thank all analysts everyone, who joined the call for your time and attention.
2021 was a great year in our journey.
We are transforming our business the milestones that we accomplished it was something that we are very proud of Q.
Q4, we consolidated a whole new level of volumes.
We are structurally better prepared to 2022, we know that <unk> will have.
Challenging.
We are confident on delivering consolidated organic EBITDA growth in 2022 ahead of our <unk> performance.
So thank you very much for.
Everybody for the call I see you in May and have a great day.
Yes.
Bank fifth thanks, everyone for participating today, you said that the conference call has concluded have a nice day.
Yeah.
[music].
Is that a lot of people.
So you saw the pound sign up okay.
Yes.
Mhm.
Oh, Yeah, no doubt about it.
No.
Yeah.
Fair enough.
Bob.
Got it.
Okay.
Yes.
Okay.
Hey, Joe.
[music].
Bob and I promise.
Got it.
Yeah.
Although it will be a document.
Bob.
So that's our plan.
No.
Uh huh.
Hi, Matt.
Got it.
John .
Okay.
That is all the above.
Fernando.
[music] ethanol plant up online.
Yes.
[music] brought us along.
Oh My God.
Bob.
Hello Ghansham.
Yes.
That's.
No problem.
David before he amounts are positive.
No not at all.
No.
Got it.
So that will happen.
Yes.
Hum.
No.
[music] economy.
Okay.
Hey, guys.
Hey, Omar.
That is hardly at all.
We also offer and I'll leave at that.
Okay.
Bob.
Got it.
Belmond.
No.
Bobby.
Okay.
<unk>.
Perfect.
Got it.
Yes.
So it's kind of all these yet.
[music].
But on April .
J D power sign up okay.
Uh huh.
Yes.
Mhm.
Oh yeah.
No.
Yeah.
Bob.
Got it.
[music].
Uh huh.
Yeah.
Judy.
[music].
Uh huh.
Bob.
Got it.
Yeah.
Hi, Joe.
It will be a document.
Bob.
<unk>.
Uh huh.
Scott.
Yes.
Thank you Greg.
Does that Anthony.
No.
So I'll put it another way.
Okay.
Yes.
[music], that's all for now.
Okay.
[music] brought us along.
Oh My God.
Uh huh.
Hey, Anthony.
Got it.
Yes.
No problem.
Okay.
He is also a positive.
Yes.
Yeah.
Yes.
Got it.
Sure.
Yes.
Uh huh.
No.
Got it.
[music] economy.
Bob.
You bet.
Hey, Omar.
Yeah.
No.
Vietnam.
Most of our planned only over and over.
Okay.
All of that.
Got it.
Belmond.
And I guess the hedging program.
Bobby.
Sure.
That's our plan.
Emily.
Okay.
Got it.
Since Alcoa.
Yes.
[music].
There are a lot of that.
So you saw the Mount Sinai brokers out there more.
Hum.
Yes.
Mhm.
Oh yeah.
No.
Yeah.
No not at all.
Perfect.
Got it.
[music].
Yes.
Yeah.
Bob.
Judy.
[music].
No problem.
Got it.
Yeah.
Although it will be a document.
Vietnam.
So that's our plan.
<unk>.
Uh huh.
Are those now.
Got it.
John .
Yes.
That is all the above.
But out of the way that that over time.
Yes.
And I'll finish up my mind you.
Yes.
[music] a lot of demand.
Hum.
Hey, Anthony.
Got it.
No.
Yes.
No.
We have already announced are positive.
No not at all.
Got it.
Sure.
Yes.
Hum.
No.
Okay.
[music] economy.
Okay.
Okay.
Hey, Omar.
That is hardly at all.
We also offer and I'll leave at that.
Okay.
Uh huh.
Got it.
Belmond.
No.
Thank you.
Bob.
That's our plan.
Okay.
Got it.
Yes.
That's our goal.
It's kind of all these yet.
[music].
Is that a lot of that.
So you saw the Mount Sinai brokers out there more.
Hum.
Mhm.
Oh yeah.
Bob.
No.
Fair enough.
Got it.
Okay.
Bob.
Hey, Joe.
So.
Uh huh.
No problem.
Got it.
Yes.
Although it will be a document.
Vietnam.
Most of our family fare banner.
Uh huh.
No.
Got it.
Well no.
Uh huh.
Thanks Anthony.
That's all for now.
Okay.
[music], that's not something that's on my mind.
Yes.
[music] brought us.
Hi, Joe.
Hum.
Hey, Anthony.
Okay.
Yes.
There are.
No problem.
Uh huh.
He is also a positive.
Yeah.
Hi.
Yes.
Got it.
Sure.
Yeah.
Yes.
Okay.
No.
Yes.
Okay.
[music].
Bob.
You bet.
Hey, Omar.
Yes.
No.
Vietnam.
Most of our planned only over and over.
Okay.
All of that.
Got it.
Belmond.
No.
Hey, Bob.
Yeah.
And the way that animals.
Okay.
Yeah.
Yes.
Sure.
So it's kind of all in <unk>.
[music].
Is that a lot of that.
So you saw the bounce on Apple guys out there.
Hum.
Mhm.
Oh yeah.
Perfect.
No.
Yeah.
Fair enough.
Got it.
Okay.
Yes.
Bob.
Judy.
[music] Bravos.
Got it.
Yeah.
Uh huh.
These documents.
Now I guess on Vietnam.
Most of our family fare banner.
Uh huh.
Got it.
Are those now.
Got it.
John .
Okay.
Does that mean.
No.
Fernando.
Hello.
Yes.
[music].
It's not something that's on my mind here.
Okay.
[music] a lot of demand.
Hum.
Bob.
Thank you Anthony.
Got it.
Yes.
That is.
Oh boy.
David before he is also positive.
<unk>.
Hi.
Got it.
Got it.
Yes.
Okay.
No.
Yes.
Okay.
[music] economy.
Okay.
Okay.
Hey, Omar.
Yes.
Okay.
So that is all.
Dawn.
Most of our planned only over and over.
Okay.
All of that.
Got it.
No.
Bobby.
That's our plan.
Emily.
Perfect.
Got it.
Yes.
Sure.
So it's kind of all of it yet.
[music].
I imagine a lot of that.
April .
I'm curious how do you bounce on our brokerage assets.
Hum.
No.
Mhm.
Oh yeah.
No.
Fair enough.
Bob.
Got it.
Okay.