Q4 2022 Ambev SA Earnings Call
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So culture is basically.
What would the living how.
How we interact with each other what are the rituals and things that are part of our day to day.
And our culture should not be like something that is a strange to you.
You should not go against end of your values is just like the way that week in the company right now.
Good morning, and thank you for waiting.
I would like to welcome everyone to Ambev fourth quarter and full year 2022 results conference call.
Today, we have with US Mr. John <unk> CEO of Ambev and Mr. Lucas Lee, our CFO and Investor Relations Officer.
As a reminder, a slide presentation is available for downloading on our website.
Our I thought and that dot com dot BR.
As well through the webcast link of this call.
I would like to inform you that this event is being recorded and all participants will be in listen only mode. During the Companys presentation. Afghan Bob's remarks are completed there will be a question and answer section.
Well, we kindly ask that each analyst ask only one question should any participant need assistance. During this call. Please press star zero to reach the operator.
Before proceeding let me mention that forward looking statements are being made under the Safe Harbor in Securities Litigation Reform Act of 1095.
Forward looking statements are based on beliefs and assumptions of Ambev <unk> management and on information currently available to the company.
Involve risks uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future.
We caution investors not to rely unduly on any forward looking statements and urge you to carefully consider the risks described in our filings with the Securities and Exchange Commission from time to time.
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 in such forward looking statements.
In addition words such as believes expects anticipates intends plans estimates projects forecasts, one future or conditional verbs, such as well may could should and would as well as any other statement that necessarily depends on future events unturned.
To identify forward looking 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 with the fourth quarter or full year 2021 results as the case may be normalized figures refer to performance measures before exceptional items, which.
Are either income or expenses that do not occur regularly as part of Ambev core activities.
As normalized figures are non-GAAP measures the company discloses the consolidated profit EPS operating profit and EBITDA on fully reported basis in the earnings release.
Normalized figures must not be.
Considered as an alternative to GAAP measures to evaluate our financial performance. In addition.
They may not be comparable to non-GAAP measures used by other companies in the industry.
Now I'll turn the conference over to Mr. Jay on their study Mr. Joe study you may begin your conference.
Hi, everyone welcome to our Q4 and full year 2022 earnings call. We have a lot to cover today, how we ended 2022, which was a great year for us.
Now we have planned for 2023 and how the year has started.
So let's begin we are a company that dreams big to create a future with more tears.
In 2022 was a year of many achievements in bringing this dream to life. Our team's engagement remains at great levels and interestingly. The question on bright you work at Ambev reaches its highest score since 2018.
My team came through once again, so I want to thank and tell them, how proud I am to be on their site everyday transforming this company.
Our reputation and connectivity with our ecosystem also improved with NPS up 14%, which meant more positive impact and shared value creation with clients wholesalers suppliers and the community we serve.
Operationally, our Brazilian business was the highlight with our platform framework showing its potential thanks to the healthier brands.
Innovation.
Improved service level and the scale up of our tech knowledge beats, you be and DTC big bets.
And financially there were lots of reasons just celebrate.
2022 was another year of record volumes and this time with better net revenue per hectoliter performance and with double digit normalized the bitter growth, which was ahead of our growth in 'twenty or 'twenty one.
And in addition, normalize at net income also grew double digits in our always see expanded thanks to better asset turnover.
And all of this back by another year of consistent free cash flow generation.
In Q4's performance allowed us to deliver a stronger HQ and put us in a good position to start 2023.
Volumes grew one 5% in the quarter, our 10th consecutive quarter of volume growth, reaching the highest volume in any given quarter in the history of this company.
Net revenue per hectoliter grew nearly 20% versus Q4, 'twenty one with growth in all regions and normalize at the beta grew a little over 27% in the quarter, despite inflationary pressures impacting our costs and expenses.
The commercial execution during the FIFA World Cup stood out in the quarter.
In Brazil beer for instance, despite the poor weather in Brazil's early elimination, we managed to activate our brand with clients and consumers throughout this tournament.
Led by our high end brands, which grew volumes north of 25% in our mainstream brands, which grew mid single digits, we sponsored more than 40 events, reaching over 20 million consumers with Brahma and Budweiser as the official sponsors.
Of the tournament.
Also bes enabled us to serve our clients better with demand, peaking at 480000 Hectoliters in a single day for the first time in our history, while the delivery was the official delivery yet of the Brazilian national team increasing.
<unk> not only awareness from 50% to 62%, but also expanding to over 350 cities across Brazil.
As for Brazil, Nab whatnot attach the official sponsor of the Brazilian National team was one of the most chocolate brands in social media during the World Cup. Meanwhile, Pepsi Black remained on fire more than doubling volumes versus Q4 'twenty to 'twenty two.
And also we were awarded the bottler after year for Pepsico in Latin America.
In Argentina, we organize at the biggest celebration to welcome the champions with Cumulus, leading the national teams parade upon their arrival in Buenos Aires, and Budweiser hosting celebrations in every region to give consumers the birds, we brought home.
He lives overall, although volumes were down one 6% in the quarter net revenue per hectoliter inquiries.
56, 4% and normalize at the beta was up 93, 6% for the year lost delivered around $5 8 billion re eyes off normalizes, the beat out of which approximately $3 6 billion Reais came from Argentina.
Now not everything went well in the quarter.
In Canada, despite market share gains in beer, we were unable to grow volumes on the back of a weak industry and normalize it a bit it declined about 4%.
Thanks to commodity and food inflation more than offsetting net revenue growth.
While despite a sequential improvement overall CAC volumes were down more than 13% in the quarter, while normalized at the beta declined nearly 11%.
In the Dominican Republic high inflation continued to be a reality any panama volumes continued to be impacted by short term competitive dynamics challenges in traditional trade and.
And we have not yet recovered previews market share loss.
Finally, there was a tax settlement in Dominican Republic, which led to higher other operating expenses, which is a one off.
Absent this tax settlement normalize at the beta would have increased about 1% in the quarter.
So that's it for 2022 and now lets talk about 2023.
I'm actually starting the year more confident than I started 2022.
Even though there are still challenges and volatility in many countries. There are plenty of opportunities ahead, particularly in Latin America markets as I believe the region is set to benefit in the current environment.
Also our business continues to have momentum thanks to the execution of our commercial strategy, leading to continued top line momentum.
And for the past several years, we witnessed significant inflation impact in our costs and expenses well ahead of our topline performance.
Now there is no longer this disconnection between top line and cost and expenses inflation. In fact, what we are seeing it's quite the opposite continued topline momentum while costs and expenses inflation comes down and this is excellent news.
And finally, our balance sheet and cash generation remains strong.
The fact that our cash generation has been consistent even during COVID-19 and despite all the macro challenges we face is a clear evidence of our financial capabilities.
So what do we want to accomplish in 'twenty two 'twenty three.
In 'twenty two 'twenty three we want to deliver another year of continuous and consistent improvement.
So let me break it down what I mean by this in terms of growth our ambition is to deliver two things.
First another year of consistent topline and bottom line growth with Brazil, keeping its momentum.
While our international operations work to bounce back with CAC in Canada recovering performance and in loss, our biggest focus will be Argentina, where we will work to keep operational momentum, while preparing our business to be flexible winner.
Jail to adapt to the macro environment to the extent that volatility may require.
And second at the consolidated level pursue another year of normalize it a bit the growth acceleration growing above the 17, 1% we delivered in 2022.
And in terms of profitability, we want to continue working towards not only improving our or IC, but also improving our margins performance. We have work to do here, but we believe we are on the right track. It is good to see that costs and expenses headwinds.
Seem to be finally easing.
Having said that it's been a busy start to the year.
There has been a lot of noise from events unrelated to us we have already set the record straight and we'll continue to do so to protect our company and our reputation.
The silver lining however has been to see how our ecosystem has had our back it has been amazing to see how much my team has shown leadership to carry on but also how much support we have been receiving from former employees.
Consumers clients wholesalers suppliers and partners Lucas will go into a bit more detail, but I wanted to none of the less thank everyone for being there for us.
And if you put the distractions aside the truth is that the business continues to do well we are kicking off the year with carnival in Brazil, finally, coming back for real our plan for Carnival was built around bringing our platform to life at the different festivities.
Across the country. This was definitely the carnival of the Brahma franchise, which was executed nationwide and presented at traditional media. So show Street vendors and point of sales and Brahma was not alone with our beats fresh eyes innovate.
<unk> with Sky P beats the hottest innovation of this season, while said delivery showed up big time to deliver a broad assortment of mainstream core plus and premium brands to consumers.
Brahma KP beats and set delivery were ranked among the four brands with the most earned impressions on social media during carnival with Grandma ranking in the first place more than doubling the number of earned impressions that Brahma and skol together had in the corner.
Oh off 20 sweeny.
To wrap up as I have said before 2023 we'll certainly bring challenges and risks, but also opportunities with a business that is over 80% located across Latin America, we know how to navigate uncertainty and volatility.
We will continue to focus on the things we can control is acute and our plan to deliver consistent results. Once again any effect. What gives me additional confidence is that 620 20, we have been building a better company on the back of our transformation journey.
So first we have a solid culture that has continued to evolve as we have embraced it actively listening across our ecosystem more collaboration internally and externally and more long term thinking embedded in our planning.
Decision, making and compensation model.
Second our operations are solid in 2020, we developed a sound long term strategy for the next 10 years and we have been executing the plan consistently since then we decided it should recover from Covid prioritizing top line growth step.
In June our volume performance.
Two are more clients and consumer centered.
That four model and the plan has been working and third we are financially solid our cash flow generation has been consistent over the years, allowing us to invest in future growth, while maintaining a strong balance sheet and also remaining net cash.
Cash.
In other words, I feel we are stronger than ever.
Thanks to the great people, we have a clear strategy with disciplined execution of the plan in no shortage of capital to fund this journey.
So that was it. Thank you all and let me handle this over to Lukas.
Thank you, Jim and Hello, everyone I would like to start by covering the noise in the beginning of the year that Jim mentioned and address this right away.
There are three topics in particular.
Tables with suppliers tax litigation in Brazil, and the Brazilian tax reform and IOC.
First payables with suppliers.
As a matter of policy, we do not enter or support for fate transactions or his soccer.
When we do so it's on an exceptional basis or to comply with local laws and some Latin American jurisdictions.
That said amounts involved are immaterial as disclosed in our 'twenty to 'twenty two financials. So this is a non issue for us.
Also since we are a listed company in Brazil and in the U S. We comply with tier forest and given our payment terms, we apply I FRS 13.
I F. R. S 13 considers that there's an implicit finance cost and the amounts charged by suppliers that needs to be segregated and allocated in financial results.
Therefore, the effective cost that's reported in our Cogs excludes this components in our accounts payable are accounted for at present value.
Second tax litigation in Brazil.
Brazil has an extremely complex tax system that often gives rise to different interpretations and as a result extensive litigation.
This is a reality of several Brazilian companies, whether large medium or small.
Just to give you an idea according to a study published by inspire in 'twenty 'twenty. If you add up all the tax litigation in Brazil, It amounts to approximately 75% of the country's GDP.
Anyway, as we've abundantly disclosed in our public filings, we have a relevant amount of tax litigation that based on the advice of external counsel there is a possible, but not probable chance of loss.
About 90% of this amount relates to 15 specific tax positions such as goodwill amortization IOC man hours free trade zone foreign profits among others.
These tax positions have been challenged by tax authorities over the years and will continue to be litigated for several years to come.
We believe in the merits of our legal position in each of these cases and that we will ultimately prevail.
And regarding specifically the mouse free trade zone. In addition to what we've publicly stated and disclosed it's worth reminding everyone that these tax incentives are set forth in the Brazilian constitution, and our subsidiary auto Sogou has been producing concentrate for guarana, Antarctica and other nonalcoholic beverages in the region for <unk>.
Over 20 years investing in our local production capacity sourcing guarana seeds locally as well as generating jobs for local communities.
The disputes between tax authorities and taxpayers are known for more than 12 years and the part of the case that reached the Supreme Court in 2019 was actually ruled in favor of taxpayers.
And third the Brazilian tax reform and IOC.
It's been widely reported that there is a tax reform under discussion that may be passed in 2023.
This reform may include changes to indirect taxes, but also direct taxes, we support any tax reform that reduces the complexity of the Brazilian tax system and that does not increase the total tax burden of the industry, which is already among the highest in the world.
Now in the context of the legislative debate about the direct taxes reform there have been discussions towards ending the tax deductibility of the IOC.
If the IOC is no longer deductible for tax purposes, we will look for alternative ways to mitigate at least in part the impact on the company.
Since the legislative debate on the tax reform is ongoing it's still early to comment further we will keep the market informed as appropriate.
Okay with that out of the way, let's move on to our performance for 2022 and our priorities for 2023.
Starting with 2022.
2022 was another year, where we delivered on all our ambitions.
Number one Brazil back to Bottomline growth with normalized a bit up 15, 6%.
Number two at the consolidated level normalize a bit the grew 17, 1% versus 10.9% growth in 2020 one.
And number three H two was stronger than each one with consolidated net revenue growing 23% versus 19, 1% in H, one and normalized EBITDA, increasing 20% in H two versus 13, 4% in H one.
What's more normalized profit increased 12, 6%, thanks to normalized EBITDA growth lower growth of net finance expenses and lower effective tax rate ROIC ex tax credits expanded from 20% to nearly 25% with asset turnover improving once again.
Cash flow generation top 20 billion reais for the year, despite the year over year shortfall in Q1, and much lower cash generation in CAC and Canada throughout the year.
And all of this while still investing for the future with $6 5 billion, a rise of Capex and $6 5 billion Reais in sales and marketing.
And finally for the year, our payout totaled 12 billion reais in the form of IOC related to our 2022 fiscal year, but also from prior years.
Consequently, we start 2023 with a cash position of nearly 15 billion rise with less than 4 billion reais in debt, which is a great liquidity position to be in and in terms of sustainability. We also made meaningful progress towards our 20th twenty-five goes for instance, we ended 2022 with 11 car.
<unk> been neutral operations.
<unk> plant in Brazil, two in Uruguay, and one in Argentina that combined will avoid the emission of 30000 tons of Sidoti.
Also we reached 100% of renewable electric energy in our operations of Brazil, Argentina, Paraguay, Chile and Uruguay.
Adding to the Dominican Republic, Panama, and Guatemala, where we had reached such thresholds in 2021 and lastly, we already managed to reduce carbon emissions from scopes, one and two by more than 40% since 2017.
While for scope three we reached over 200 active partners of our supply chain in Brazil in the collective effort led by us to reduce scope three emissions representing more than 70% of the total value chain emissions, keeping our commitments for 2020 five on track.
Now, let's quickly talk about 2023.
What should be similar to last year.
Number one top line growth remains a key priority with net revenue performance once again, driven more by net revenue per hectoliter than volumes.
Number two we expect a tougher Q1, given higher input cost pressures, but this time more from commodities than effects and number three our focus on value creation drivers such as return on invested capital economic profit and free cash flow generation all remain.
And in terms of what should be different from last year number one although input cost pressure remains a headwind we expect our cash cogs per hectoliter for Brazil beer, excluding non ambev marketplace products to grow between six and nine 9% for the year, which is significantly lower than the $16 six.
<unk> percent growth in 2020 two.
This cost outlook is a result of our commodity hedges, where aluminum became a tailwind as well as our FX hedges with the average BRL USD exchange rate at five point 10 for the year after four years as a significant source of pressure.
Number two SG&A growth should improve given lower inflation overall as well as internal restructuring designed to streamline and optimize our b to B D to C and Fintech technology Big bets.
We invested heavily from 'twenty to 'twenty until 2022 to scale up these platforms quickly and we now see room for a more integrated approach as far as structure is concerned.
And number three CAC in Canada back to organic growth.
In CAC, we will continue to focus on reigniting demand for our portfolio by activating key selling moments via brand and trade investments as well as a disciplined commercial execution.
While in Canada, we will focus on resuming momentum by focusing our investments in above core and beyond beer brands, but also evolving in the digital transformation that is currently underway with <unk> and.
And finally speaking to our financial priorities for the year No change here, we will continue to focus on four things.
Improving our financial discipline with a focus on liquidity as well as cost and expense management, while reinvesting for growth in.
Improving profitability through increasing our return on invested capital, but also focusing on margin expansion.
Furthering our value creation agenda with a focus on growing economic profit as well as free cash flow.
And returning excess cash to shareholders over time.
In other words, we will pursue another year of continuous and consistent improvement in our financial performance as we continue to transform this company.
That was it on my side time for Q&A.
Thank you.
We will now be conducting a question and answer session.
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Participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.
At the time, we ask that each analyst only asked one question.
One moment, please while we poll for question.
Yeah.
Yeah.
Hi, Thanks for taking my question and congrats Charles loopholes.
Question would be regarding a follow up on Canada.
Just curious if you can.
Can explain a bit better hygiene, why don't you will see equal or.
It appears to be.
Like kind of like a structural problem in our market.
And then Bob.
Situational right so.
Just curious if you can comment.
How would you like to grow it is trying to engage them also again in panel one perhaps that you cannot comment on any some almost stopped exports package.
How did the quarter looked like.
My question. Thank you.
Okay, Hi, Rodrigo. Thank you for your question. This is this is Lucas speaking.
In terms of reasons to believe for Canada in 2023.
There are a few points worth worth highlighting.
I think number one we're going to continue to work to resume momentum right bye bye continuously to allocate resources behind our our brands within the core plus premium.
Segments in the market.
We've had over the last few years very good market share performance across segments across regions within Canada.
Despite a decline in the industry.
In the same period okay.
Number two we're going to continue to bet behind that beyond the beer beyond beer was a was an industry that suffers particularly more in 2022, then the another beverage categories.
And so but we did see some some sequential recovery towards the back end of the year. So if the beyond beer in the beyond beer industry continues to regain momentum going forward and as we continue to invest behind our portfolio there that should also.
<unk> be helpful. Looking ahead okay.
In addition to that.
<unk>.
There's a big focus on our part to two stabilized mainstream in the Canadian market. So.
<unk> core core plus and premium brands have momentum like Michelob, Ultra Corona and Stella Artois.
And within mainstream we started to stabilize mentioned in 'twenty to 'twenty two.
And Bud light outperformed in that in that case in that segment and we need to keep it up with respect to Bud light and an improved performance for Budweiser.
In that segment going forward, Okay, and apart from that I think the issue.
If you think of kind of macro overall.
I think Canada inflation remained remains at high level, but it's expected to mitigate somewhat in 2023, so having this kind of a downward trend.
Inflation helps.
So that's another another thing to follow.
And we are also not seeing kind of any any evidence of widespread trade down okay.
So.
If you if you combine these things they're not going to be like a 111 silver bullet solution right, it's going to be a combination of things execution of commercial strategy right.
I forgot to mention Beast in Canada, right started to be.
Rolled out in 2022, and we have also plans for for continuous expansion in 2023. So that's also a big focus for us going forward okay.
Okay.
Yeah, that's great and hopefully you've had a campaign.
Just on the cash flow generation perspective in Canada.
Any figures you can comment.
Yeah, So I think with respect to Canada there was.
Consistent with the the.
The tougher a bit the performance that we faced during the year cash flow cash flow also ended up being impacted okay.
<unk>.
And so that's certainly something that we need to to improve going forward.
But if you look at if you break cash flow down for Canada.
The bigger the bigger issues that we saw in Q4 were around payables. Okay that was the biggest that was the biggest issue that we face when you think of working capital from a working capital perspective. It was mostly related to payables, just given our capex curve for the year.
And overall performance in the back end of the year, particularly December we typically have December as if not the most important.
Month for cash flow generation, it's among the top months are collect cash flow generation.
And so given our performance in Q4 with the volume shortfall and the like that ended up also have any consequence on our working capital Capex overall.
Remains kind of consistent with with the path just the calendar ization was different and that ended up impacting our our payables for for <unk>.
The last year.
Okay, that's very clear thank you Lucas.
Thank you.
Yeah.
Okay.
Your next question comes from Lucas.
Mary Lynne.
J P. Morgan. Please go ahead.
Hi, Good afternoon, everybody. So my question is about your outlook for beer sales in 2023, if you can comment about her first of all expectations for the industry. If you think there is a space for for growth in <unk>.
Sumption after after a very strong 2022.
And in the case of a of a ambev.
Bev you think you can still gain market share, which are which are part of the market and should we expect that to grow more.
And also if you can comment briefly on the beginning of the year. There was also kind of a rainy, especially in so Paulo given the issues you guys had in the first quarter is you can have that survey of any early views on on on the first quarter of 2023. Thank you very much.
Thank you Lucas.
Asia as you here.
I think it's a good question about about volumes are we had a strong year in 2022 overall, we have a plan for 2023 to continue to gain market share in our key markets, including including Brazil.
We have been working on the on the brands on on innovation.
Our Archie M is.
Unparallel now with B. So we are confident on market share gains.
And talking about the industry. So, yes, we had a Q4 and.
Moving into Q1.
A better weather rainy.
In Brazil, but this things usually goes with the time. So we believe that the industry is to going to be positive.
In in main of our markets.
With market share gains.
That's that's pretty much it.
Perfect. Thank you very much.
Our next question comes from Marcello.
With credit Suisse. Please go ahead.
Hi, Yeah, Hi, Lucas. Thank you for taking my questions. Let me just first to do a follow up on Lucas' questions regarding Brazil, and then I will have other two questions very quickly can you just remind us of the price increases taken throughout 2022 for Brazil beer and watch the Spectre X.
Beckett carryover for 2023, and then I ask it the other two questions.
So yes, so during Q4 Mycella, we usually we have our conduct on prices.
Just before the summer.
And mostly off the price for 'twenty to 'twenty three we already.
That's true.
In Q4.
And what we have seen is that.
Steel LLC our resilience.
In most of the carryover of 'twenty to 'twenty three is already in place is a good starting point, where we are today.
Yeah.
Okay and the other two questions very briefly basically first on Brazil beer, a weekend said that volumes are up 17% versus 2019 top line up 48%, but.
But margins down around 13 percentage points right. So which now also are the size of the focus on our absolute growth.
How much of that margin do you think we tend to recover.
And if there is any timeframe for that that would be the first question and gesture to already ask the second one.
Regarding the guidance of consolidated organic growth of 17 of ahead of 17%, which regions can we expect to outperform in them perform at this level. Thank you so much.
Okay. So.
Marcelo you've been following us and we.
We made a conscious decision.
In our 2000 2010 year strategic plan that game.
Together with the pandemic too.
Accelerating.
Our our performance.
The board at Ambev.
Where we decided should do go out of the pandemic with topline led recovery.
Accelerate our plan of weakened vaccine with consumers and customers innovating the white space that we have in the market. So it was pretty much our our a conscious decision to accelerate top line.
And at that time, we had that.
Dilemma on.
Decided our corn dogs on revenue management more based on EPC or Egypt Amy.
And then we were very.
Deep consumer understanding and we decided to raise the products and to follow.
More of the baskets of our consumers more of this year, even though our costs they were sick.
Cyclical moving more close to the Egypt Ami and the good part is that we have been for 10 quarters.
Celebrating performance on the topline 10 quarters with positive volumes growth and we are in this brink of this point, where our costs are beginning to come back.
To normality and any skew our we see our top line with volumes and resilience on conduct.
With with momentum so I think it's in our journey as time to keep the strategy and naturally we believe that this things you'll get.
Easier.
On the margin side, if we continue like that so we gave the guidance of cash Cogs.
Moving in between six and $9 nine we have to remember that this number was 22 in 2021. It was something around 16 last year and now it's moving to something more close to a high single digits. I think this is a.
We see like a.
Things coming together, where the margins.
Should begin.
To expand.
So I think it's hard to give a.
A timeframe.
But I think that's the year, where we are really fighting.
To get to have margin expansion again on top of topline growth.
And in return on invested capital growth. Okay. So this is one of the.
The second the second question is that yes. So.
We want to accelerate a bit the performance.
So.
Last year, we mentioned 2022 has to be better than 2021 and then.
And then we moved to age two has to be better than H one.
And now we are looking to 2023 should be better than two inch when enjoy think this shows a lot of consistency.
And fundamentally and structurally.
The company moving each of their right direction.
What we believe it is that Brazil will keep its momentum.
Both business beer and that they will keep momentum.
There will be.
I important unlock of value in life.
We're.
Oh I see.
Yeah.
We want to see we begin to see Shelley really unlocking value.
Our supply capacity constraints eased.
Made the investments our plants really increase at capacity, so we will be.
<unk> able to to reduce and accommodate imported.
B is that we had that was what's the very expensive with this whole issue of ocean strikes that we had last year in Argentina, we were.
Really very rigid on our hedging policy and protection that we have to in terms of currencies in Argentina, and we feel that we are kind of overpaying for the financial.
Protection.
We work with a lot throughout.
Last year or two to really work on operational edge, which we evolved contracts with suppliers to have more local currencies on our contracts and I think we will be there was a lot of value in loss, mainly because of Chile, and Argentina, and we see Canada back into normality in Cogs.
Going back to normality Chu.
Moving first to work on margins on Scott then on on the volumes a little bit further so somehow Brazil momentum and reversion.
Of international operations.
Okay, John Thank you so much.
Okay.
Next question comes from Carlos Laboy with HSBC. Please go ahead.
Yes, Hello, everyone.
I have two questions.
One for Lukas.
A b I dropping.
Net debt to EBITDA.
Below 3% if you look at this year.
Change your flexibility on on how you think about the capitalization.
Of of Ambev differently.
And for Jay Jay can you speak to her.
So some of your brand marketing keeps evolving.
To appeal more broadly to men and women more evenly and is it working and perhaps you can direct to some of your answer to Corona specifically in the progress that's being made there.
Okay.
Hey, let me I'll take the first one then and then junkin.
And the just the second question Hi, Carlos Thanks, Thanks for the question.
<unk>.
When when we think about capital structure.
We need to keep in mind, we need to be mindful of the fact that.
The current state of our capital structure is impacted by the deductibility of the IOC.
And so.
As a result of that whenever whenever we think about capital structure, that's an important consideration.
Number one.
Number two when.
I would say that when we think about when we think about kind of.
<unk> net debt I mean for us that's that.
That's more of an issue that's more of an issue for Abi.
And less of an issue for us we tend to focus on what's the optimal capital structure for Ambev. Okay.
And within that.
<unk> capital structure, we need to we need to always be mindful of the IOC. So that's an important consideration.
Joe over to you.
Laboy talking about brands.
So so yes so.
The previous three years was.
There was a lot of work on.
Reworking on our brand's re prioritizing brands.
Really organize it organizing a portfolio that has less overlap that's really have targeting consumers in the right way and we are very happy with overall this overall strategy.
We've seen equity of our portfolio in general picking up.
Going back a little bit on on but I'm gonna do Promulge Brahma the tumultuous so relevant to the Roma franchise, it really rejuvenate.
Our most important brand that is so we saw now during the carnival.
From a really picking up as a as the franchise overall.
<unk> reconnect.
With.
The young people.
As we have not seen for a while so we are very excited about seen Brahma rejuvenating with Remo Diploma Archie.
We signed this carnival true.
Our innovation strategy.
Its best.
The beyond beer.
Back during carnival in the new product that we launched that it was a caipirinha in Cannes with the beats franchise. It was amazing to see how it really goes beyond the beer it was really a.
It was really about.
Young populations was really about women it was really about.
There is a lot of increments LNG on that.
On that product.
As we've seen the market and then go into premium Corona is a brand that that we don't talk that much because it's so important juul that we have in our portfolio that we are really.
Working more on the brand side ahead of the volumes.
Really connecting the brands with the exploration of a.
Of the new generation of sustainability of reconnecting with their with their so so we are very excited about Corona Corona is performing very well always gaining a lot of.
Brand equity and we are really nurturing in a way that.
It can be the most premium.
The most important premium brands in Brazil.
Thank you.
Our next question comes from Jeremy <unk>.
With Bank of America. Please go ahead.
And good afternoon, everyone. Just some clarification on the last question.
Sharon you mentioned that there is a lot to do in Chile, there is capacity to unlock there and we know that the company had to deal with the latter distribution deal.
I was just trying to understand how much capacity you are adding to the region and how all of them that the distribution channel became for you.
The country and the second question is related to the Doe to lobby if you could share a bit.
In terms of the potential cross sell that you had already.
Forget visa using these in there why do we can expect.
This cross sell to be going into 2023.
Okay.
Thank you for the question.
So so Chile.
We ended up.
The year.
Increasing.
30%.
Our local capacity over there.
It was an important expansion in our supply capacity.
That we had and this will help us.
To really unlock value and sustain momentum over there.
And for sure the deal with Indiana was.
We changes levels over there.
It's really overall.
Our most important.
Partner over there is our Archie M. We still get we still go direct on supermarkets.
So.
But they do the logistics, but overall the traditional trade the on premise. So it's so we really go through them and it's amazing their execution and their ability their reach.
So very happy with the deal.
We've been nurturing the country for a while.
And then we increased it.
Supply capacity that will help us to unlock a lot of a lot of value in their culture. Okay. So so this is one of the.
The second thing it is really it was a great year for Nab.
It was a.
It really something that changes our perspective on the possibilities that we have moving forward with Nab.
It's.
It's the combination of Ah.
A stronger than ever partnership with Pepsico.
So we really we are really in a good moment of.
Doing the plan together.
Both companies are betting on Brazil.
Important footprint for the growth.
And.
Right decisions on the portfolio side, so we increase the capacity down here for Gatorade, we launch it we.
Completed our Skus for Pepsi Black.
Didn't have.
I got the Azores H <unk>.
Really is really on fire flying so good decisions on the portfolio side.
Our our capacity and possibilities of reach and in connection with our customers. So in the in the end.
And the best we had a funnel that it was the sales rep that has limited time to talk about our products now we have like 25 minutes more of attention of our customers to our full portfolio algorithms that really.
Suggest for customers, so what type of products, they want and in a lot of attention.
From customer sides choose to really solve.
They are they are they are in one platform with these so so NPS.
Customer satisfaction going up usage going up in a total different possibilities that we have to increase in land innovation and have a broader portfolio. So the combination of.
Good portfolio decisions good partnership with Pepsico in.
And this is really something that.
Bet. This super confident that this business can be much much bigger than than what we have.
That it is today.
Thank you.
Our next question comes from them.
The stolen wed.
BTG Pactual. Please go home.
Hello, Hello, Lucas two questions from my side, the first one on Brazil beer.
When we look at the product mix in Q4, we see remember we're growing in the twenties.
Corp loves growing roughly lateral consolidated and appears that core plus.
Underperformance in the quarter. So I just wanted to understand how do you see the portfolio changing among these categories throughout 2023.
And during 2022, if you could also comment how much mix helped to the.
12% price game that'll deliver in Brazil beer.
That's the first one the second one on Cogs, if you could just share more details in terms of the recovery that's ahead.
What was already achieved in Q4, and what you're going to reach their historical volumes and profitability levels that we had there.
And also how should we think about the timing for that so those are the two one thank you.
Okay. He can.
Let me get the first one so.
Sure.
It was a very strong year for us in in volumes.
So in the end we grew 4%.
In 2021.
In Q4, right and three 5%.
The full year.
And what we have seen is that in last quarters their war.
Celebration on the premium.
And in our core is very resilient. So so these are.
Strong volumes in total core resilience and then a lot of trade up and we have seen the premium a premium the premium very resilient. So when you look in the mirror in the core plus so what we are seeing more and more is that we had a big boom with Brahma Tupelo March during the pandemic. It was designed it.
The in home occasion, and it was designed to rejuvenate drama.
As the consumers coming back to the trade we have seen the combination of Brahma promotion Brahma they are very positive.
So Brahma <unk> <unk>.
More.
Helping to raise you vinay the full franchise of Brahma. So we have seen the eye interaction over there in the promotion of Brahma.
That we that we are happy that has been very beneficiary for the most important brands.
As we have in our portfolio and then we have spotting that.
We started.
Really with this mindset of spotting being core plus plus but the truth is that sparkling is really moving each of the premium segment. So that the the prices on the spot and has been very resilient.
And as we are.
As we are still supplying the full market in Brazil demand is ahead of our supply capability and we are beginning to see we have seen more and more during this the effect on Q3 and Q4 of <unk>.
Passing moving ahead of the 130%.
Our price index that we have in the market. So as Patty is really premier Nizing and really going more on the premium basket. This number that I'm, giving you the 25% does not heavy spotting we still are following but I'm gonna do promotion is putting together.
And they are they were positive this combination during the year, but what we are seeing is that putting moving each of premier in the groundwater promote you're helping to rejuvenate the full franchise of Rome. In this combination luxe is something that is it's been very very good for US we are very very excited.
With this move so somehow I think is I'll begin should talk moving forward with putting more on the premium.
On the premium segment.
But I'm gonna to promote more insights.
The Brahma family.
Okay in terms of in terms of <unk>.
Thank you.
I think 222 points to consider.
A number one in Q4, we managed to continue to progress.
The plan right to recover following the stabilization of the supply chain issues right glass bottles imported product that we faced earlier in the year. So we had set out.
An objective on our part having stabilized the supply chain.
To really recover.
Coverage, so availability of the products of the Skus that were unavailable in the past given the supply chain disruption, we set specific targets to improve the level of coverage and the good news is that in Q4 the level of coverage continued to improve sequentially from Q3.
Q4, so that's good news.
And the second keep the eye that we hadn't decided to focus on as part of this recovery plan is to track.
The suggested price to consumer right that we work with.
And the adherence of that by by our clients and there is also.
Encouraging news there because from Q3 to Q4.
The level of price.
<unk> suggested PTC also continued to progress well on a sequential basis, and Meanwhile, kind of inventories levels have kind of normalize. So there's there's there's less of an issue there. Okay. So in the Dominican Republic I think there is good progress and even when you break down volume performance.
<unk> by months right, we saw already.
We had.
November slightly better than October and December was already much better than November and October . So again early days, we still have a lot of work to do going into 2023.
But I think Q4 the recovery.
Is going as planned.
There was the tax settlement one off that obviously impacted the overall performance.
But that's kind of behind us and so the focus in the Dominican Republic is really make sure that the execution in the marketplace and the availability and the health of our brands right.
It is progressing as recovery.
And in terms of Panama.
Panama, We also we also.
<unk> had some progress I would say not as much as in the Dominican Republic. Okay. Thank Dominican Republic is one step ahead of Panama in terms of recovery, but in Panama, What I would highlight the evolution in Q4 is really the NPS. So net promoter score our service levels to clients from Q3.
Q4 also kind of step changed so that's important progress we saw some of that in the Dominican Republic, but NPS was more pronounced the evolution.
In Panama just to give you a data point, we went from the low point of NPS of 20% to 57% in Panama. During Q4, so that's a step in the right direction, we still faced issues in terms of specific channels, particularly the traditional trade so our market share there.
There is still kind of below what we would like it to be so we have to fix the execution of the brand and make the right portfolio of bets in terms of resource allocation for our investments.
But again, we're confident in the plan for 2023 and in terms of the timeframe for the recoveries its hard to give you a specific timeframe, but we do see 2023 is a year, where we can go back so organic EBITDA growth.
In fact, right that that's an important objective of ours, where we werent happy with the overall performance of the business in 2022, so we need to do a better job in 2023, but Q4 has given us. Some some early early early signs that give us confidence for 2023.
Let me just go back I think you had a second question.
Didn't address it was more on the.
The rates on the mix.
Prices overall.
So I would say that.
That's somehow of this sort.
Net revenue per hectoliter that we had.
A big chunk of it like 70 70, 775% of it was really right.
And then the rest of it.
You should.
Break it down half of it being mix.
And mainly mainly brand mix.
And half of it would be overall margin pool.
That we have like Chan those in and trade okay.
That's very helpful, Joe and Lucas Thanks, so much.
Our next question comes from Ricardo Alves with Morgan Stanley . Please go ahead.
Hi, Lucas Thanks, so much for the call a couple of questions.
One for Xian, Brazil beer.
Talk a little bit more about competition.
The 4%.
Volume performance.
To the point that you made the company is running at a high level.
But.
Back in October I think that expectations were higher because of the World Cup. So just curious to see.
What in your view are held back volumes from going beyond that 4% beyond the weather you should that we already discussed but.
Did you see any any kind of consumer deceleration or perhaps fiercer competition, which I wanted to Topeka brands brains map your brain zone.
And.
I don't know maybe competition directly or maybe one of your two largest competitors maybe.
More aggressive on the on trade channel, So just a little bit more color on the competition front.
And then the second question Luca if I may on derivatives.
The line in the quarter, if I'm not mistaken 530 million reais or so we thought that that line.
Also based on our last call thought that because of Argentina, and Brazil hedges, we would expect a higher number. So just wanted you if you could elaborate a little bit on that.
Particularly considering Argentina hedging or the carry costs running above 100% I think that maybe.
I alluded to that maybe we're doing less hedges, but just wanted to have more clarity just to.
For the sake of modeling if we should assume that what we saw in the fourth quarter it could be something more consistent.
For us to model going forward or if there should be a ramp up on the derivative line into the first quarter and the first half overall.
Thanks again everybody.
So let me get the first one Lucas got the second one.
Got it so thank you for the question. So so yes, so 4% volumes in Q4.
Just.
To us to remember so this is this was.
Ahead of <unk>.
So Q4, we saw sequentially improve.
Improvement or market share for us.
In.
'twenty 'twenty Chew was a year, where we gained market share overall so.
4%, where we're good volumes.
Try to give you my best guess here, Okay and so this is not.
Perfect numbers, but it is our best guess my best guess is that the World Cup drove one 5% of the volumes in the quarter.
So this was.
We believe that some point in time could be better than that.
I think we could have 1% more.
Brazil went through the finals.
But it didn't so just talking about Brazil on the other hand, it was really we have seen really the rainy weather.
In Q4 in a little bit in the beginning of this year that could have mitigated like one full point for us in Q4, the weather that we had.
We had back there. So this is more or less the numbers that.
That we had.
For for Q4, and we are excited about.
Market share gains.
We believe that we can continue to gain market share.
During June 23.
Our plans are really on the direction of.
Of gaining market share.
There is still a lot of room for starting to grow our high end brands.
They are very they are very solid.
It was amazing to see this.
This return how regional picked up how shocked up at all.
The Roma franchise, what we're always doing is doing well and how the core.
Resilience, so we really believe the desktop.
That somehow.
We are we will be continue to gain market share and yes competitors are active Brazil was always market debt.
Where we are with a very.
Strong competitive environment, but if you look back at you see everything that we did.
From 2019 to today it was great. Our companies is really on the another level in terms of.
Volumes in terms of market share level, we are very excited about this whole critical mass that.
That we have.
Okay and speaking about the losses on derivative instruments hiccup.
When when we think of.
The evolution of that line in 2022, we.
We need to look at both the carry cost for for the Brazil for hedging the dollar against the Brazilian real and the carry cost for hedging.
The Argentinian peso against the U S. Dollar in Q4, what we saw was in terms of the Brazilian real hedges.
We actually didn't see in increments.
Because although the exposure was higher in Q4 of 2022 versus Q4 of 2021.
<unk> cost in Q4 of 2021 was already around 7% a little over 7%, which was also the case for Q4 of 2022. So the exposure went up what the carry cost didn't have.
A material increase so net net there wasn't a big impact in the quarter from the carry cost in Brazil and Argentina.
<unk> in the quarter.
We saw was a higher carry cost. So if you look at the carry costs from Q4 2021. It was in the sixties, okay, whereas the hedging the carry cost for Q4 2022 was was around the 100% that you mentioned.
And since Q3, when the moment, we started to see the carry cost go above 100%.
It became it became really prohibitive, so even though rates we have the policy in place with on average 12 months.
Of hedging in advance with this window right.
Two months to go longer two months to go shorter so it's a 10 to 14 month range.
In Argentina case, given that the costs became kind of prohibitive in our in our judgment. We started in Q3 to reduce rates, we reduced the level of hedging that we do until we see.
The carry cost right.
Move away from from the prohibitive level that we witnessed in the second half of the year, Okay, and so what that means for Q4 is that although although the carry cost went up our overall exposure was lower because we started this process of hedging less overland.
Argentina.
According to our our the management of our hedging policy Okay.
But for the year, okay for the year.
And then the picture is slightly different because Argentina was still a factor.
But in for the year, Brazil was also a relevant factor because if you take the the overall view for the year, but carry cost in Brazil on average jumped from low single digits.
Around 4% to two north of 7% for the year. Okay. So that was a that was a bigger impact I should take the yearly view going forward.
We are still following the hedging policy right for currency and commodities.
I would say that apart from the views that we've taken for the Argentinian peso.
And John alluded to the fact that in addition to this decision around financial hedging.
Hedging less than in the past, we're also reviewing right out of our local local sourcing and the terms of that.
To try and have more of our contracts right. The nominated linked to local currency inflation and not the U S. Dollar. So there's a work plan to get more operational hedges in place okay.
But going forward apart from the view on Argentina, right I think it's still reasonable to work within our our 12 month on average.
Hedging for currencies for aluminum for barley and whatnot okay.
That's very helpful. Thank you Shannon and thank you look as well.
Our next question comes from Robert Waterstein Lab.
Evercore. Please go ahead.
Great. Thank you very much.
A couple here.
You mentioned.
In the call I think on the press release.
Positive brand health metrics, and Brazil and in beer can you is there any way that you can give us any sort of quantification on that how it compares to the past just so you know we kind of put more meat on the statement.
Maybe at the particular brands any order of magnitude anything around that and then in a related question.
A couple of years ago.
You went on a journey of really kind of changing the culture of of Ambev you changed some of the incentive programs.
Targets.
Perhaps if you can give us an update on on those changes and how those have improved are you your execution.
You've liked so far from those changes what still needs to be done. Thank you.
Yeah.
Yes.
Okay.
So Robert is talking about brands for.
I would I would mention so we have.
A metric that we follow of our full portfolio debt.
We ask so if one of our brands.
<unk> is a brand that the consumers love. So so so the question is.
Do you love one of these brands and we put our brands and the other brands over there and we had in Brazil.
By the end of 2019.
44 million consumers mentioning that one of our brands or a.
I love it brand by them and we ended up 2022 with 49 million consumers mentioning that one of our brands.
<unk> is a love it brand by them. So I think this is.
This is the magnitude of.
<unk>.
Yeah.
Impact on consumers, that's our portfolio.
In this.
Briefly.
Before the pandemic and then and then in the right now and this is the growth is very concentrated in the brands that we.
We decided that we picked.
Should we be nice.
In the graph is very concentrated on Brahma.
With the promotion of Brahma franchise.
Next quarter.
Corona.
Stella and Bud light Okay. So these are.
Therefore, the four or five brands that that's really moving the needle and now we are seeing.
Spotting.
Really arriving with a lot of with a lot of power.
For the first year rent. So this is the <unk>.
Type of numbers that I can.
Share with you.
Moving on to culture.
So so so yes, we've been.
We've been working a lot on cultural evolution.
So life back there in 2019.
We had a clear view that our growth matrix.
Had change it for the future debt so the.
So what we did in the previous 20 years was not.
Same thing that we should do.
In the next 20 to be a successful company, so our growth matrix or more on.
Reconnection with our community and ecosystem. It was really about understand the pain points and innovating with customers and consumers and then using this window of opportunity to transform the company into technology and then when we look at this what we would need that Youre doing this 20 years it was clear for us.
That our culture has evolved.
We really are.
<unk> really maintained the roots of our company that has really ambition and dream big.
We have this this mindset that this company is owned by the employees. So we really sustained depth, but we really are.
<unk>.
Three new behaviors values that we are working a lot there is a.
The collaboration there is actively listening and long term perspective, so distressed things are really bad debts.
In the evolution of our culture, we have been measuring this so in our.
Climate survey engagement surveys and we are happy.
Happy with the progress that's been made.
No that go through evolution. This seems that takes time you would have to leave every day I have to to really be an example of that so we really have to build the habits, but we are very happy.
With the progress that we have been made on that matter.
Great and just a follow up on the brand health metrics and that that was a great number.
Is there any was that increase more.
More pronounced in any particular part of the country and does that open up opportunities or suggest opportunities in other regions and was it relative to any particular demographic.
So what we have seen that.
I can't I can't.
Pinpoint one region.
Specifically.
<unk>.
But somehow.
So a lot of these efforts they are coming.
In.
The legal drinking age population of 18 to 25. So what we are seeing is that this population, we're really picking up.
And we are bringing more women to.
To connect with our brands to I think these are true.
Drivers of.
<unk>.
Of connection.
That's fantastic. Thank you very much.
Our next question comes from Thiago <unk>.
Let's see with Goldman.
Goldman Sachs. Please go ahead.
Yes, Hey, Yale Halo because of good afternoon, everyone and thanks for taking my questions I have.
Check it for a little bit more dynamic some cost inflation on pricing right. So you'll have this guidance right and from what I understand and I'm glad I can see an implied curve. It really seems that the concentration of our parents there'll be areas much more frontloaded right in the first semester. If this is right in assuming does this what did change.
At all your pricing strategy and the traditional pricing calendar that you typically following the year in the SaaS have eventually or trying to anticipate a little bit of pricing to fully offsetting inflation already in the beginning of the year. This is the first part of the question and the second one you have still a range right up 6% to 10%.
So obviously I understand there's very little volatility and we'll only know for sure. Once you go for it but from the <unk> cohort part offshore cash Cogs right, which is currently the largest component that's yet to be covered those are the questions. Thank you very much.
Okay. So.
Thank you.
The first question is.
So we made the decision to disconnect.
The the pricing actions that we have the decision then.
Just connect with our costs right, so I mention that.
Right or wrong. So that was the decision to really look into consumer pockets in brainpower in demands and really made the decisions on pricing more launches in two consumers, Dan looking cyclical effects and calendar effects of costs.
And we're going to maintain that so so.
So we are really making our seasonal pricing understanding.
Disposable income understanding brand equity understand consumer demands.
And so we will be very consistent on that matter.
Off really.
Maintaining beer included in the best basket of our consumers and desired. Okay. So so somehow we see the effects of costs.
In a different calendar, that's true, but we will not change the way we price because of that so we had been maintaining that for like two years, two years and a half and we're going to continue on that direction.
But the good part is that the things are coming together, so we have seen.
Resilient elasticity as end consumer demand of our portfolio and we are seeing now costs really coming back to some normality to some mean and this naturally will make us to be in a better position.
In terms of.
It was off margins, Okay, and then just to add on the on the non commodity inflation.
Inflation.
I would highlight a few things here Chuck.
One mixes mix is a factor right. So.
Depending on how our returnable glass bottle volumes performed versus.
Our our can volumes rights during the year that can have that can have an impact. Okay. So that's a that's something to consider and and in addition to that.
There are some some of our input costs.
They they part of the price is linked to the commodity cost the core commodity like aluminum right, which follows the <unk>, but another part of the price equation is linked to local inflation things like.
Labor.
Fixed industrial costs that also need to be considered and so what we're seeing in the non commodity side of the equation. In addition to mix is just an escalation right.
Overall.
With.
The non the non the noncore that's linked to the commodity itself and Thats, mostly labor.
And in fixed industrial costs okay.
Great. Thank you very much.
Your next question comes from Philippe <unk>.
With the Scotiabank. Please go ahead.
Thanks, operator, good morning, Dr. Lucas Thanks for the space.
Maybe a follow up on <unk>.
You mentioned that obviously, there's going to be more focused in Canada.
The market is clearly very different right. We've been you've been very focused on these in Dominican Republic.
Brazil.
<unk> Argentina.
Now this is kind of a market with a very different makeup on the channels. So just wondering how you approach the market differently.
Given that situation.
And I also wanted to do another question on the efficiency of selling and marketing expenses Abi mentioned how.
That number has been has been fixed.
About $7 billion per year for the last four or five years I think they mentioned, but somehow they're managing to move up the ranks on all sorts of different awards. So just wondering if you can talk about how that translates and what's happening is happening at all but thank you.
Okay.
Okay.
Somehow so first talking about to be sold.
So first of all.
We are very excited about about B L.
And so.
So be it.
We talk a lot we talk a lot about.
The marketplace in the partnership and the alliances that we are doing.
So we are really increasing our AR.
Our alliances with D. I show with Bernoulli car model is really is really a company that we are that we are.
Collaborating in these.
<unk> there is a water brand in Brazil sequel, So we've talked a lot about.
The marketplace effect and the ability for us to bring.
To really be the connection of suppliers and customers and be in the middle but but so we are very excited because in Brazil, we are increasing sequentially value on death revenues. That's what the margins are getting better our lives as theyre getting deeper customers.
They like but the truth of it is that.
So the Beast is is really a transformational two of our company that it's the front line of our business.
And we have to receive.
The go to market as it is needed and use <unk> as the platform that will make us much more productive more efficient.
In terms of.
Salesforce.
You should see in terms of changing the role of the sales reps to be more of a sales representative that's worth on an.
On pool and not push so BS, we don't talk that much but it is my is my frontline it might use salesforce, so having said that.
Uh huh.
We are really supporting that it it really.
Participating via our frontline in every place that we are so we started in the Dominican Republic, we came to Brazil, We went to Argentina, Paraguay is really moving and we are implementing in Bolivia in naturally candidates coming.
And it's really about.
The connection with our customers in the efficiency of our sales force and the ability that we should be more productive in our core business is not just about the.
Valued that brings from their lives, but be more efficient on our core when you talk about sales rep trucks and deliveries and it will help us across the board on that and that's how it's going to help Canada of course, Canada.
Particularities, but somehow it is it is.
It will be our.
Our company there will be more productive with this yes, so just to add to that specifically on Canada.
This does in Canada, I think a good way to think about it is.
It is.
One of our priorities is to get it right in Quebec.
In Quebec, where there we have.
Route to market that allows us to go straight to the clients and so that that that's an opportunity for us to replicate and kept back many of the learnings we've had.
In terms of implementing BS in places like Dominican Republic, and Brazil, So I think in Quebec, which is a priority.
The ambition is to is to make come back and have a benchmark right for more developed markets in terms of <unk> execution. Okay.
And then you have the other other regions of Canada, where the route to market is not direct you go through the beer store and in Ontario, you have the liquor board.
On the on the West Coast in British Columbia, So and in those in those in those regions of course, we have to kind of adapt how these.
Will will be used as a solution, but but irrespective of the different routes to market in Canada, we see we see an opportunity for <unk> to become an industry, leading <unk> solution, that's going to kind of bring digital and thats revenue in and be adopted by by the box across the.
Our country and that's another aspect of Canada.
No different from other markets is because it allows us to not only deliver incremental services to our clients, but also bring in other companies as partners for the platform, but we're starting to see that happen in Brazil and in <unk>.
We're starting to see that happening in the Dominican Republic, as well and that's another opportunity for Canada. During the course of 2023 in the years to come.
Okay.
Okay.
This concludes our question and answer session I would like to turn the conference back of it Mr. Gian Duress study for any closing remarks.
So thank you very much. Thank you everyone, who joined the call for your time and attention to any trade issue was a solid year.
On the strategic operational and cultural in fighting this fight another year of record volumes.
With better net revenue per hectoliter performance in double digit normalized EBITDA growth.
Of what we promised a ahead of 2021 net income also grew double digits.
<unk> expanded and economic profit also improves.
The higher cost of capital and what we see for 2023, our ambitious our topline growth remains a key priority with revenue and net revenue performance driven more by net revenue per hectoliter than volumes on bottom line SG&A 22 was better than 2021.
In H two of 2022 was better than H. One of 2022, we will work to continue keep it up to 2023 to be better than 2022.
Profitability, both in terms of Rois seat as well as margins and free cash flow generation and although we are expecting for Q1.
In terms of mainly of cash Cogs, given the higher prices on Walmart. So really excited really optimistic about 20 between sweet and thank you very much see you in may and have a great day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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How we interact with each other.
The rituals and things that are part of our day to day.
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Spectrum people for them to understand.
This we believe that we should all behave and things that get us together like the glue that makes US one company one thrive one group of people that can be very different but they have like similar beliefs.
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So culture is basically.
What would the living.
How we interact with each other.
Third the rituals and things that are part of our day to day.
In our culture should not be like something that is a strange to you.
It should not go against end of your values is just like the way that week in the company right down things that we.
Spectrum people for them to understand.
Thus, we believe that we should all behave.
Things that get us together like the glue that makes US one company one thrive.
<unk> group of people that can be very different but they have like similar beliefs.
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