Q4 2023 Ambev SA Earnings Call
And full year results.
Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly as part of them, perhaps normal activities.
As normalized figures are non-GAAP measures. The company just closest the consolidated profit EPS operating profit and EBITDA on a fully reported basis in the earnings release now.
Now I'll turn the conference over to Mr. She actually Saatchi <unk> Saatchi you may begin your conference.
Hello, everyone and thank you for joining our Q4 is weird Joannie 23 earnings call.
Today I will go over our last year performance and then shed some light on what you expect in 2024, so let's get started.
2023 in review it was a noisy year with a lot of distractions, but commercial strategy in Brazil continued to work led by our premium brands.
<unk> recovered thanks to Dr, which even with beyond <unk> in Q1 results.
The bad news in Argentina made the difference with more cash flowing dollars being generated and profitability came back in a big way with growth in the EBITDA margin expansion pretty much across the board, while our Roissy also improved.
Translating this into numbers EBITDA grew 43% organically and 7% in nominal terms despite the impact of.
FX depreciation in Argentina.
Gross margin expanded 240 basis points in the EBITDA margin 430 basis points cash.
Cash flow from operating activities grew 20%, reaching almost 25 billion reais and free cash flow step change to $17 7 billion Reais.
Normalized net profit reached over 15 billion Reais. However, it was flattish on the account of increased taxes, mostly due to higher effective tax rate and currency devaluation in Argentina.
All this while challenge it by 30 industries in Canada and Argentina.
<unk> Corp on tax credits in Brazil, and a steep FX devaluation in Argentina.
And this performance was driven by.
Our consistent commercial execution throughout the year with focus on the consumer.
With industry volumes growing in half of our top markets and seven out of search top 10 markets delivering a net revenue per hectoliter acts marketplace performance above inflation, our continued development of our digital platforms over 90% of our.
Gross turnover in Brazil was transacted Vips.
<unk>, our NPS at all time high levels once again.
<unk> of our third party marketplace products growing over 44%.
Totaling $3 3 billion Reais.
Third delivery in Brazil, expanding coverage and awareness, reaching $5 7 million monthly active users and growing <unk> by 8%.
An effective decisions around optimizing our business as a result cash cogs per hectoliter and cash SG&A grew below net revenue growth supporting both gross and EBITDA margin X patients.
This shows how sound our operations are and how well we manage to cover commercial momentum such as in Brazil, and pack into free cash flow or offset commercial headwinds should protect our financial performance such as we did in arch.
Tina and Canada.
Now I would like to share some highlights by geography, so let's start with Brazil beer.
In Q4 premium volumes grew in the mid twenties, and we estimate having gained market share in this segment for the fourth consecutive quarter with brand health indicators continuing to improve.
Corona was the highlight once again proving the effectiveness of our strategy.
Other segments. However, led total volumes to decline one 1% as we faced a tough comparable from FIFA World Cup last year.
Net revenue per hectoliter performance continued with momentum in the quarter, while cash bogs and cash SG&A grew below net revenue leading to 27% EBITDA growth, coupled with growth and EBITDA margin expansions in.
In the year, we checked all the boxes, we grew almost 3 million hectoliters in premium volumes, coupled with brand healthy mid <unk> EBITDA margin expanded 500 basis points to 32%, resulting in EBITDA of $12 five.
Then.
The highest in our history.
So let's go for Brazil, Nab volumes grew over 6% in the quarter driven by the consistent implementation of our commercial strategy, increasing both the number of bias and number of Skus per block hour.
Our diet light zero portfolio grew over 22% with a highlight to the new retina zero and the continued success of Pepsi Black.
The 0.5% decline in net revenue per hectoliter was explained mostly by increased VA cheap taxable base for carbonated soft drinks and some channel mix with the increasing of the third part distribution in our mix.
Cash Cogs per hectoliter and expenses, however declined supporting an EBITDA growth of 50% and EBITDA margin expansion for the full year, we estimate our market share remained stable, while we continued to grow in energy and.
Health and awareness, both with ours and our partners' brand delivering on the beta of almost 2 billion the highest since 2015.
So let's talk about glass in Argentina volumes in the quarter declined driven by an industry that was impacted by macroeconomic conditions. However, our new financial and commercial playbook on how to operate in the Argentina environment allow with us.
To accelerate revenue management, while keeping market share stable offsetting increase in cost and expenses to accelerate inflation.
So in the year cash flow generation in dollars improved significantly even taking into consideration the FX depreciation in 2023, and the gap between Barlow and official rates as we implemented this new playbook. So.
In 'twenty 'twenty four we already started to repatriate this cash generated in 2023.
As for the other operations in last full year EBITDA grew in the mid teens with margin expansion, resulting in the highest nominal EBITDA in history.
CAC volumes grew seven 7% led by the continued recovery in the Dominican Republic this quarter.
Positive industry supported volume growth S. Presidente brand family continued to recover and premium brands grew ahead of total volumes.
Net revenue per hectoliter was up four 5% while costs and expenses grew below net revenue translating into growth in the EBITDA margins above 40%.
This was a year of turnaround impact.
Volumes top and bottom line, we're back to growth with margin improvement.
And as for Canada volumes decline on the back of a continued tough industry performance in the quarter in our growing cash Cogs per hectoliter affected by the lower volumes really impacted our EBITDA growth in the year EBITDA grew low single.
Digits, thanks to initiatives.
It is to curb costs and expenses, considering I sluggish topline.
Now changing gears to 2024.
First let's talk about operations. This year, we want to deliver consistent results with operational performance being the driving force behind our sustainable value creation paths.
Being able to translate this commercial momentum into more free cash flow generation.
And to illustrate why we are confident in our strategy, let me use Brazil as an example.
Although today, Brazil represents one of the largest beer per capita consumption in the world, we still see opportunities to grow such as in the north and North east regions of the country.
Ines for premium beers it has grown but it is still under indexed in terms of participation in both beer and alcohol spaces as well as in the number of occasions. It is consumed.
Since 2019, our premium volumes grew about 8 million hectoliters, while our total volumes grew over 11 million hectoliter, which is greater than the industry growth for the period.
And in terms of costs, we expect to face less input cost pressure, given currency and commodity tailwind, partially offset by mix and fair value adjustment of payables, therefore, assuming current commodities and FX prices.
We expect our cash Cogs per hectoliter in Brazil beer.
Excluding non ambev marketplace products to decrease between five and 3% in the year.
Second let me share a little bit how we kicked off the year.
Carnival in Brazil was great and we are off to a good start to the Brahma what are noncash and beats sponsored the three largest carnival festivals in Brazil Salvador huge <unk> in Sao Paulo, and brought over 31 million people together during the period.
Sales volumes during carnival were great and brand connection we will last for the rest of the year Carnival is a huge moments for our brands to connect with our consumers and to present innovations. So we delivered a strong brand execution for Brahma and the new <unk>.
And it's scaled up beats tropical as the innovation of the season performing over two times better than what <unk> did last year.
Third, perhaps our main challenge relates to taxes in Brazil.
In 2023, we paid approximately 32 billion Reais in Texas, nearly $11 billion of federal taxes, and almost $22 billion in state and municipal taxes.
Our effective tax rate was higher than 2022.
As a result of higher profits in Argentina, the Dominican Republic in Canada, and less IOC tax deductibility.
And in December Congress in Brazil passed a legislation on deductibility of IOC and.
The state government ramps that should impact our effective tax rate going forward.
However, the precise impact is not yet entirely clear Lucas will come with more information.
This topic, so let's summarize our call.
We are confident about accelerating volumes, especially in Brazil.
We step it change the free cash flow generation and it will remain strong and solid in 2024.
Year that we will present its own set of challenges just as every year since joining swinney. David. Nevertheless, my team has been managing to overcome them and deliver continuous and consistent improvement therefore.
Therefore, I would like to thank my team again for the great stringent III and I'm counting on them to deliver in 2020 for the next step in our transformation journey by doing what we have been doing the best acting as owners listening to consumers and clients work.
King collaboratively with our ecosystem.
At disciplined execution in the short term, while laying the groundwork for sustainable value creation in the long term.
So thank you very much now let me hand, this call over to Lukas.
Thanks, Jim and Hello, everyone.
We had four financial priorities for 2023.
First to improve financial discipline, focusing on liquidity as well as cost and expense management, while reinvesting for growth.
To improve profitability by increasing our return on invested capital, but also expanding margins.
Third to further our value creation agenda growing economic profit as well as free cash flow and fourth returning excess cash to shareholders over time.
I'm happy to report that we progressed on all fronts.
Liquidity remained solid throughout the year, which was valuable in a year, where several other Brazilian companies faced numerous challenges stemming from the credit crunch in the country.
Disciplined cost and expense management resulted in cash Cogs and cash SG&A growing below inflation with or without considering Argentina.
We continued to invest for growth with sales and marketing totaling $6 5 billion Reais and capex totaling 6 billion rash.
Return on invested capital expanded over 330 basis points, thanks, mostly to better know Pat margin, but also better asset turnover, while gross margins and EBITDA margins also expanded as you already mentioned.
Economic profit grew compared to last year, while we delivered record levels of cash flow generated from operating activities at nearly 25 billion reais.
And finally, we paid <unk>, one 7 billion reais in connection with the exercise of the Dominican Republic put option and still returned $11 5 billion to shareholders.
And all of this while dealing with looming headwinds in Brazilian taxes in Argentina.
So let me tackle these two because they are irrelevant going forward as well.
The constitutional amendment required for the tax reform on consumption was finally approved by Congress in December and we now move to the next phase of the process, which is to pass enabling legislation before the transition period begins in 2026.
Lots of work to do here to ensure we move towards the less complex system and that does not increase the total tax burden of the industry, which is already among the highest in the world.
And in terms of income taxes changes were made to the rules regarding the income tax deductibility of the IOC and a state government grants.
On IFC adjustments were made to the legal parameters for purposes of calculation and deductibility of the ILC.
Accordingly pursuant to the terms of the new law. The main change to our IFC basis is that as of January one 2024, it will be adjusted downward by the value that was recorded in the carrying value adjustments account in connection with the stock swap merger carried out in 2013 that allowed us to move to a one share.
<unk> system.
As for the deductibility of state tax incentives the new law is already being challenged by several parties on constitutional grounds. As a result, it's still premature to say whether or not there will ultimately be an impact on our results and if so to which extent.
We will do our best to offset these headwinds as much as possible be at the income statement impact be it the cash flow generation impact, where we see more opportunity given that we have other tax credits to be used over the next few years.
This is important because it gives us time to reassess our capital structure in an orderly fashion as well as look for other opportunities within <unk> corporate structure.
And finally on the tax litigation front, we ended the year with 95 billion reais in disputes with a possible, but not probable chance of loss.
During the year, we had a 17 billion positive impact of these disputes due to favorable decisions at administrative or judicial courts, as well as certain legislative changes and so far in 2024, there have already been an additional $4 billion of favorable decisions as disclosed in note 32 to our financial statements.
<unk>.
We will continue to keep the market updated as new developments horizon. Our main disputes many of which we continue to expect will be subject to decisions at the administrative level during the year.
Now Argentina.
Our results under <unk> were materially impacted from an accounting standpoint, given the Argentinian peso devaluation in mid December of 124%.
Page 15 of our press release contains a detailed description of the different impacts. However, we had been preparing for this for over a year. So we will continue to follow our game plan.
And not all as bad news, though.
Despite the accounting impact the combination of operational performance gradual reduction of our FX financial hedges and structural reduction of our exposure in U S dollars allowed us to end 2023, having generated more cash flow than USD than in 2022.
Capital controls have also eased, which has allowed us to begin repatriating funds.
We still have a long road ahead, but we know what needs to be done and the team has demonstrated its ability to execute and deliver despite these extraordinary circumstances.
And speaking of the future I wanted to call out that as from January one 2024, our definition of organic revenue growth will be amended to cap the price growth in Argentina to a maximum of 2% per month.
And corresponding adjustments will be made so the organic growth calculation of the income statement in our press releases going forward.
We believe that given the circumstances. This more closely represents the underlying performance of the business and is in line with practices adopted by other cpg's.
Turning to our financial priorities for 2024, it's all about consistency.
We will continue to focus on liquidity financial discipline profitability value creation and capital allocation.
We have important headwinds. Indeed, however, since 2020, we've had to navigate a lot of uncertainty and volatility, but we've found ways to overcome them to keep delivering growth profitability resilient cash flows all while building our path to sustainable long term value creation.
Finally, before moving to Q&A I would just like to call out some of our highlights on the sustainability front.
Sustainability is about impact and in 2023, we took concrete steps towards that and particularly on the environmental front.
Our 2025 environmental commitments are on track.
We were the first company of the brewing sector in Latin America to receive final approval for our emission reduction targets from the science based targets initiative.
We closed the year with an average of $2 37 liters of water used per liter of beverage produced improving by more than 8% versus 2022 as well as with 15 carbon neutral plan.
Okay.
More details to come in our sustainability report, which should come out in the coming months stay tuned.
With that let's go to Q&A.
We will now begin the Q&A session to ask a question. Please click on raise hand button at the bottom.
Turnover question from the queue. After your question has been made placed click lower hand.
We have reinforced our request that each participant ask only one question.
The first question comes from is that <unk> with Bank of America. Please go ahead.
Hi, and good afternoon, everyone I Hope you hear me well.
<unk> low cost.
I have a couple of questions first of all of course on the power side right for <unk>.
Hi, Thanks.
Cancel deal that's cost have declined more than probably what you guys announced.
Given the movement that moves on commodity.
Yeah.
And then the FX relief right from the BRL. So I wonder if you could break that expectation down.
<unk>, you mentioned ADP and also.
The mix right. So if we could explore its right to the key drivers of cost per hectoliter I think that would be we'd be very very helpful.
The second thing is on SG&A right. So <unk>.
You guys have been at the leverage.
A more efficient SG&A in 2023, so I wonder.
When we don't see that as much of a cost tailwind in 2024, how SG&A plays out.
With a margin driver potentially for the year.
And finally my last question is on Argentina.
I think of course, there was a big headwind from FX, but on the other hand.
Margins were quite strong.
As increased prices so.
How can we think about the top line margin equation for 2024 and as Neil environment. Thank you.
Bella.
Lucas Let me, let me kick off with with question number one and then we will take the other two the SG&A, India and China. So respect with respect to cash Cogs per hectoliter.
A few points Isabella I think first.
When we factor in only FX and commodities right, then and then here commodities I'm, referring to not only what we can financially hedge but also what we can physically hedge.
And when we factor in efficiencies on top of that.
Guests all else equal we would get to a mid single digit decline in cash Cogs per hectoliter okay.
However, when we account for the higher premium mix I think we did we had some commentary on how our premium volumes are growing well ahead of the rest of our of our volumes are off our brands.
And it's important to remind everybody of that.
There is a benefit and obviously the mix shifting more towards premium.
Even though it impacts Cogs that has a positive effect in net revenue per hectoliter and in terms of profitability right.
Then when we factor in as well the payables fair value adjustments, which by the way has a virtually neutral effect on net income right. Because there is the impact on our finance results.
And then general inflation and to a lesser extent kind of change in royalties because there was a new law passed last year, that's how we get to the low single digit guidance. Those are kind of the the building blocks. So if we were to local only at FX and commodities mid single digits, but when you factor in premium mix payables.
Fair value adjustments inflation on the royalty you will get to.
You'll get to the low single digits that we're providing guidance for and within those for the two biggest ones are really the ones that we called out on the press release, which is mixed number one and number two the NPV and those two correspond to more than 50% of the impact okay.
Okay.
Hi, Isabella here, so moving into SG&A I think SG&A was it was a great year for SG&A in 2023.
Cash SDN SG&A declined by two 3% year over year in Q4.
<unk>.
It was the combination of a good grip on administrative expenses.
Bob.
Basically because we changed the way we operate.
Working more.
As a platform with less silos and really leveraging the whole company for all the business that we have like beer knobs innovation deck. So there was a big reshuffle internally.
That leads to a very good performance on that you mean the investments in tech.
That made us more efficient too.
Distribution did very well the combination of commodities and higher efficiency in our logistics footprint with suzette delivery efficiencies kick in.
So these are true.
A high note points.
And moving forward looking ahead.
We are seeing more of I mean coming back to mean.
As I referenced inflation.
We begin to see an equation, where we are going to put more fire on sales and marketing.
And really to support our portfolio supports the brands, but with a more disciplined capex.
So this combination of.
A very rationale capex after years investing in technology capacity of brewery.
We feel comfortable with the level that we are but time for us to invest more in the brands and distribution will be a good year for for the distribution expenses again.
Okay moving to Argentina.
So yes, Argentina.
<unk>.
We change it the way we operated over there we created a new playbook.
Commercial and finance they broke on the way.
We would operate we changed the way we do deals with suppliers, we changed the way we.
We price our products.
We changed the way we hedge it our sales from more financial hedge to more operational hedge so it's a completely change on how to operate it paid off.
Yes, so Dan we ended the year.
Even though with this impact on the translation on the P&L cash wise, we really end up in a good place with more cash in the bank being able to begin to bring cash back.
In 2020 for now in the beginning of the year and what are we going to see in Argentina now it is thats a correction overall.
In the industry in volumes as the price.
Follows what's going on in the inflation.
And the biggest part of margin expansion.
We'll kind of.
State moving forward.
But the big upside was really in this year or social now.
As to protect ourselves on the on the on the inflation and understand how is it going to be the resilience of the consumers over there and based on that we are going to play a very nimble over there.
Really really disciplined.
But.
We have to understand where the volumes will land and then just to add one comment here.
If you go if you go beyond that be it in Argentina going back to your last comment around focus on free cash flow in U S dollars.
Another point of note for 2024 does that given that our hedge position in Argentina was reduced significantly and we started the year without financial hedge.
We should during the course of the year not half.
The carry cost in fact.
And that should also help us deliver.
Free cash flow in U S dollars as well okay Isabella.
Yeah.
That's clear thank you.
The next question comes from Liana <unk> with XD. Please go ahead.
Hi, Joe Hi, Lucas Thanks for taking my question actual questions, mostly focused on Brazil.
When you mentioned the decrease in volume for the fourth quarter and because there is a hard comps to today of World Cup in 2022, but then when we look at the price was.
Quite a positive surprise to see the seven 2% net revenue per hectoliter to increase.
Understand that.
Probably have with part of that increase is due to the to the volumes of premium increasing as well, but then I went to I wanted to understand to get a little more color introduced if there was room for volume increase in this strategy is different or if there is.
Changing strategy in front of the short term as well what are you expecting from there for Scott.
If things kind of go and everything is also doing well.
We have more room for volumes in the next quarter.
But then it was a very good number to see the price increase despite the volume coming lower.
And the second question is regarding the nonalcoholic beverages.
We've mentioned that out of the 30 prior to just two bhushan that help increase volumes was also impacted negatively the prices I wanted to get a better understanding on that.
For the last two quarters, we've been seeing the strong performance of be helping Nab and the strategy was positive for volume, but then sacrificing prices was interesting to see that so just to get a better understanding of just two questions. Thank you.
Okay. Thank you for the question, let me try to give you a broader.
Overview on Brazil. Once you asked about Q4 and Q1, so we are very happy.
Happy with that.
The Brazil performance, Brazil beer performance, Brazil was very solid in 2023, it was a great year in our view.
Looking back to 2019.
When like before the pandemic and in 2023, the industry of the country grew 11 million hectoliter.
And 100% of this growth.
He came to US okay. So when we compare 2023 with 2019, 100% of the industry growth.
Onto our products and we made it clear that in 2023, we had a priority that it was less tops.
Top line was very.
Our resilient and growing it was time for us to show Reaganite margins and it was a year of 500 basis points of margin expansion.
That was very solid for the combination of the journey of really volume's up strong topline and then recovery margins in 2023 that it was our priority. We we really felt that it was it was great.
So what we have seen so and then when you go to Q4 specifically.
So we had the tough comp off.
The World Cup.
So as an AD. So I mentioned in last quarter that the performance of volumes in Q4 would be similar to the performance of the full year.
And it landed pretty much there.
With the caveat that we had that tough comp that we did a good World Cup.
In the previous year. So if you take this effect out.
And as we move by the end of the quarter. What we are seeing it is that a strong industry in Brazil.
That kind of surprised us because it's really resilient.
And we are entering.
Q1.
With a lot of momentum.
Because the industry is solid and our market share is very well positioned for this cycle a year. So what we saw is really volumes igniting.
In Q2, and 24, when we talk about prices I always mention that.
So it <unk> as a reference for US now it measures the basket and disposable income.
Our consumers is another one and then on top of that.
We have the pluses and minuses of mix of sometimes you have brand mix, helping sometimes we have regions.
Negatively our point is as we are growing.
Into Midwest into northeast and northwest, but it was very solid pricing.
Pricing in Q4.
Overall.
It should be and we want to continue to aim the PCI with the plus and minus of our performance. Okay. So, but what we see in beer is really volume accelerated.
When we come to knobs.
We launch it.
The end of the quarter.
The new varieties of whatnot on tax.
Zero sugar.
And it was amazing to see the response.
Of the trade in of the consumers about about the product.
It didn't impact the full Q4 it went back fully.
The Q1 of this year and we are Super excited about how it is performance saw a part of our volumes.
Is that.
And it is amazing how consumers are seeing that.
There is no difference into wider nontoxic, a regular with sugar in this new Ghana with no sugar so the ability to acquire.
New consumers with whatnot zero is being amazing so having said that.
The biggest impact that we have in the net revenue per hectoliter off not it was more on the <unk>.
Change then on the mix, Okay and the in the mix. This things happened it was a combination of.
Expanding.
Into Midwest and north.
<unk> and <unk>.
North that acquired of the distribution costs.
Kicks in.
In the net revenue per hectoliter, because the wholesale of compensation keeps on the net revenue per hectoliter. It is something that.
We are going to see this part of the equation.
Happening as we grow towards Midwest.
North and northeast, but if something manageable inside the whole mix that we have sold single serve it is something that we have to drive and there's your red Bull with something that has another so we have another lever.
To compensate and visit equation of Boeing.
North East Midwest is something really that is planned something that we want to do and it will continue.
So, though that its benefit a little bit <unk> sold the solar because we allocating either so this plan.
And it's something that is intentional.
Okay.
Okay phenomenon I believe it's 100% clear Jeff.
A quick follow up on just to get your perspective perspective.
This reaction to the lower volume in Brazil seems that the most investors are kind of expecting something different than what we've been disclosing for the last few quarters. As you mentioned the expectation was really to focus on margins now in spite thing.
<unk> delivered with two hearing lots of questions regarding.
The volumes coming in lower than expected just to get your feeling on that.
Yeah.
Yes, so I'm not exactly sure about.
The reactions at this point on our Q4 I'll tell you that we.
We are excited about.
Should we chalk API so 2024.
We are.
<unk> on volumes.
We started well it was something that at some point in time beginning of 2023 I mentioned that was the big question Mark because every other thing is in on our hand, so let's see how the industry will be resilient. So I'm much more confident in terms of industry and volumes in our market.
Share performance in 2024, so I'm reasonably confident that that this will accelerate as I mentioned in my summary, and another thing is that even though despite all the noise and the changes in the hyperinflation in the discussion on the stack sites freak.
Cash flow generation is something that we step it up in.
<unk> 23, and it will stay solid.
Into 2024 sold 2020 for volumes and cash I'm really we're really confident on that.
Okay, great great. Thanks for the FERC clarification, thanks for today.
The next question comes from Ben Theurer with Barclays. Please go ahead.
Yes.
J J.
Thanks, Thanks for taking my question just wanted to follow up on your expectations just from the last question as it relates to.
The volume outlook across the different verticals.
Maybe help.
What are you going to do differently in order to drive for volume upside from a from a commercial perspective, how should we think about.
Marketing expense into 2024, how on the execution side and how does your how do you.
Digital platforms play a role in helping you are getting that growth you just talked about thank you.
Okay.
Ben Thank you very much for the question. So so we've been building for a while now this this new portfolio.
Of brands that we started like innovating into white spaces and really.
Supporting our basket of brands.
In a more intense way like.
Really unlocking unlocking.
Corona capacity that is something that <unk> couldnt do and during this period, we invested a lot on capability and our supply side.
You'll be able to sell Corona.
This pattern.
<unk> that is something to that is doing great. So Budweiser is another brand that really reignite.
Regan I did in the previous year.
Strong growth so somehow we've been building.
A better portfolio.
So the API that we follow.
There is love.
From our consumers towards our portfolio continues to increase I have 4 million people more declaring that loves one of our brands in our portfolio. So this is really 4 million.
When we compare with 2019. So then is it still growing.
So somehow we are very well set.
In our portfolio and we made a statement on the premium side right. So 2023. It was a year that we really win on the high end.
Materially right. So it was really a year, where corona performance Patheon performance.
L. A is doing well.
So our portfolio is very well set.
We're going to allocate more money.
In marketing for these brands. So this is in our plan.
And we are going to continue to increase with really investing on platforms, bringing platforms from from U S.
To work down in Brazil, I mean, Brazil, so somehow.
Marketing dollars is something that that we are going to we will be investing ahead of inflation.
The good news is that the Capex really true to produce core ROE and that you have the capability to produce nationally and the capex that we had it should do the destock platform. So the big peak is behind US now I can be more rationale on that and I have to.
It is moving forward.
And so in on top of that I'm seeing.
I saw the industry in Brazil. So we have seen we have been seeing that.
By the end of the last year and we've seen they start off of.
Of 2024.
With with momentum industry overall, our market share overall.
And we did a great carnival so somehow.
A little bit more rational capex more money to support brands a very good performance on the on the high end and important innovations.
Are really coming.
In the pipeline. So we have been investing on functionality in beer. So we have at this euros really accelerating so but zero is a success in Corona zero is coming for the Olympics and the Bureau of the year. So this is very accretive.
<unk>.
And is doing very well.
No gluten is evolving to spell a few gold with no gluten low carb.
So this is really performing very well we started by the end of last year, and it's really surprising us.
And beyond beer is really something that we've made a huge goal during the carnival with that brand.
With this.
Oh of 14 Fei.
Famous cocktails and gains like we did with IPD.
Last year, we did now with <unk> in Brazil, Thats both tropical.
It's yellow fruits with gene that we put in there Ken and then we would explore this whole somehow brands.
Better position innovation working digital platforms really supporting all of this growth and in the industry that is that that looks good. So I'm really excited about our voice.
Thank you very much.
The next question comes from Jack <unk> with BTG Pactual. Please go ahead.
Yes, I think Q, Hello, everybody Hello, Sharon Lucas.
Yep.
I was looking to go back to the discussion on the on the Brazil beer volumes in the portfolio and with the hope of of breaking down.
Do you expect both the expectation for 2024 and also the performance in the fourth quarter of 2023.
Particularly with regards to the core and the core plus segment right I mean, it's clear from for many many of the things that have been set already you talked about a more balanced performance topline performance between revenue per hectoliter and volume Johnny.
Hugh you sounded very very confident about the volume performance and the market share.
Section that you you maintain thing to have in 2024. So the question is really.
What should we expect to be.
The toolkit for protecting the core core and core plus parts of your portfolio because as you said you did a statement in the premium segment that's clear.
But it seems based on what we saw in Q4 that it's really two parts.
Other than the value both in terms of the ones that are more representative. These are the two parts of the portfolio that lost a little bit more of market share and seem to be the ones that debt.
Could command a better recovery in 2024, so just if you could elaborate on that is is it just the pricing.
Initiative.
Or are there is a lot more than that so just if you could comment even from a competitive point of view and if I may as well and this one I think it's to Lucas.
Because when you debate at the the impacts of the new the new regulation regarding the deductibility of IOC.
Bakken Many conference calls ago, you mentioned that the company had.
Toolkit to address that that's something I have been working on either with regards to changing the capital structure of the company.
Is there anything now that we know what the final impact is going to be and how it affects your effective tax rate and so one is there anything that you could share with us already with regards to what we can expect in terms of either levering up the company more dividends acquisitions capitalization of <unk>.
<unk> whatever.
Something that that we could expect to see going forward.
You.
Thank you Thiago for the question, let me start with the volumes.
So so in the end, yes, im confident about volumes.
Happy with with the high end as you mentioned.
Really doing well.
What we envision for the core it is that the core each range 23 was in line with my overall performance. Okay. When do we put my three brands.
Was pretty much in line with my total okay, and what we see it is that I aim to maintain my core brands in line with the industry is it really something that.
We missed a little bit because we missed the total.
But somehow I see my my my core brands with potential too.
To perform in line with the overall industry.
The high end is really there is a lot of growth over there and we want to see the core plus <unk> to the positive territory again.
Budweiser really leading the way and Brahma duple multi decade was really.
Our innovation that with op and its finding its new base volumes in 2024. So the combination of the shoe brands will be positive again in 2020 'twenty four with Budweiser really really doing well.
And the value is where we made a cautious decision.
In terms of revenue management in terms of allocation of my supply capability to really be.
<unk> made the decision that ideas on really reducing promotional activity over there. So what I see moving forward. It is a strong high year of Corp last weekend <unk> in our core in line with the industry and let's see where the value can land.
Hi, Chagal Lucas here.
To cover your question on IFC.
The alternatives that we have changzhou.
Two to seek to offset as much as we possibly can right.
Impact from an income statement standpoint or from a cash standpoint.
Haven't changed.
The first the first and perhaps.
The most important point in the short term relief.
It relates to.
Other tax credits that we have.
Already.
<unk> recorded an hour in our asset base right.
It's there on our financials.
And so.
As the IOC.
Is no longer deductible.