Q3 2024 Ambev SA Earnings Call
and thank you for waiting. We would like to welcome everyone to on-depth 2024-304 quarter results conference call. Today with us we have Mr. Jean Neto, Sachi, on-Bad CEO, Mr. Lucas Lira, CFO and Investor Relations Officer.
As a reminder, as light presentation is available for downloading on our website, ri.unbev.com.br, as well as through the webcast link of this call.
We would like to inform you that this event is being recorded and all participants will be in a listen only mode during the company's presentation. After a bad remarks are completed, there will be a Q&A section when we kindly ask that each participating cell site analyst asks only one question.
Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Security's litigation reform Act of 1996.
Forward-looking statements are based on the beliefs and assumptions of a bad management, and non-information currently available to the company.
They involve risks, uncertainties and assumptions because they relate to future events and therefore the penum circumstances that may or may not occur in the future.
and Vesters shouldn't understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of a web, and could cause results to differ, materially from those expressed in such forward-looking statements.
Speaker Change: 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 233rd quarter results.
Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly as part of a bad normal activity.
Speaker Change: As normalized figures are non-gap measures, the company discloses the consolidated profit EPS operating profit NABDA on a fully reported basis in the earnings release. Now, I'll turn the conference over to Mr. Jean Neto. Mr. Neto. You may begin your conference.
Hello everyone, thank you for joining our Q3 earnings call. I would like to start by putting this quarters performance into perspective.
First of all, we delivered another solid quarter of growth and profitability. Against our toughest comp of the year.
Speaker Change: Just as a reminder, Q3, Q2, and Q2, was our strongest quarter last year.
Speaker Change: Where a bit the group over 30% X Argentine in a bit the margin expanded 630 basis points X Argentine. Normalized at profit grew around 25%.
and Cashflow from operating activities increased nearly 30%.
Second, we built the square on our performance during the first half of the year, with Brazil and Cac, delivering once again.
Lass and Canada, improving sequentially and cash flow generation continuing to improve despite the well-known tax headwinds in Brazil.
Speaker Change: As a result, this quarter brought us one step closer towards delivering another year of consistent top-line growth with record volumes in Brazil.
Consistent, it beat the growth, growers, then they beat the margins, expansion, and solid cash flow generation. So let's dive into our operational performance, starting with what remained a reality.
Resilient, Consolidated, Top Line Performance in the mid-single digits, Gross-profit Groove in the High Single digits.
Speaker Change: and the Bitter Grove.
with Gross and the Bidamargin's expansion. Continued investments behind our brands across our main markets.
Speaker Change: If we break down volume performance
In Lies.
Despite some sequential improvement, we continue to see a tough consumption environment in Argentina, as volumes declined in the meetings.
Speaker Change: on the back of the easiest comp of last year. In this scenario, we are better prepared for the future with estimated market share gains and improved brand health indicators in the country.
Speaker Change: Exagentina, volumes increased by mid-Single digits, led by Bolivia and Chile performances.
Canada volumes sequentially improved with our premium back to growth.
Premium and Corpus Brands grew by low-single digits. Our Market Share remained stable in the country according to our estimates.
and our brand-helfs improved versus last year with a high-light to corona that has the highest brand-helf in the market and is growing.
In Kak, the continued strength of our business in the Dominica Republic delivered mid-Singual Digital Volumes Growth, led by Corona and Presidente, which presented a strong brain health performance.
However, in Panama, the industry contraction was primarily driven by the recent tax increases amid a tougher macro scenario, which weighed on our volumes.
An In Guatemala, a temporary logistics shipment facing faith by our local distributor, impacted our quarterly performance.
In Brazil, NAB continues with a great commercial performance, reaching all-time high volumes for a Q3 led by our Health and Wellness portfolio.
Speaker Change: with one and a zero up high 50s and Pepsi Black and Gatorine up low 20s.
Speaker Change: Volume of No Sugar Group, Low Twainis, with a highlight to our energy and hydration brands.
Presenting Solid Performances, as well. In beer, based on our estimates, in the swing July and August, grew low single digits. Below production data are reported.
This Quara, we reach it our all-time high rolling 12 months, Volmes.
Speaker Change: Our brand strategy continued to work with premium, super premium and core plus brands growing ahead of total volumes and our brands improving brand health indicators.
Our premium brands grew above 20% led by Corona, spotting and original, all of which rose volumes over 25%.
The Corpus brands grew in the low teens, led by Budweiser that increased volumes by nearly 50%.
and Aldo, Brahma and Antarctica each grew high single digits, our core branch declined by low single digits.
Speaker Change: Our pricing strategy remains nimble and we took pricing starting in September, which was earlier than last year.
In addition, one very important point to make regarding Brazil beer is that we ended this quarter better prepared for the summer season. And here's why.
Let's go to the next episode of the show. I spoke about our 4 focus brands, Brahma, Budweiser, Spatin and Corona. And I'm glad to see that the investments behind these brands are starting to pay off and they have momentum.
Iichof Search, focus brands reach all-time high rolling 12-months volumes with bud, spotting and corona reaching record brand health indicators in the quarter.
Combined this brand grew almost 10% in the quarter.
Also, our inventory levels are much healthier this year than they were at the same time last year, giving a better production in the quarter.
On top of that, we have been sustaining all-time high service level to our customers.
And before I hand this over to Lucas, as you know this is also my last earnings call as Ambath's CEO.
Speaker Change: and as I transition to a new challenge, I would like to share some reflections on the last five years. On that was built on great people, strong culture, big dreams and amazing brands.
Speaker Change: and I'm proud of how our talented team has evolved over the past few years.
We are now better prepared to listen to our ecosystem, to innovate and to drive continued transformation throughout the company through technology.
We are making better decisions. The team embrace change, dreamt big and created incredible initiatives.
from Producing Hands and Itizers in our breweries during the pandemic, to create in some of the largest innovations in the company's history.
We have accomplished so much, too many achievements, too late here, but each one remind us on how our business can drive positive impact across our ecosystem while strengthening our performance.
Over the past five years, we have attracted around four million new fans.
Thanks to the amazing work our team has done with our brands.
As you can see, we are winning in the premium and super premium segment and we are leading in the core and core plus segments. I'm also proud of our results on innovation across our entire portfolio.
Speaker Change: We made a significant push into beyond beer and into balanced.
Lifestyle Brands, where we were pioneers here launching gluten-free brands
and Low calorie beers and also leading the Zero Alcohol category. Another significant evolution was in technology. We leverage tech.
Speaker Change: To enhance our capabilities and we build a platform with bees.
Speaker Change: We digitize it our route to market, increasing the number of box.
serves to over one minute.
Why we're improving service levels? We also use it all this assets that we have to build a marketplace that offers a broader assortment of products for our customers.
and Dr. Consumer Front, the delivery is a reality.
is a love digital brand which is now available and relevant in more than 700 cities across Brazil. On our journey to create a future with more tiers, we embrace sustainability in our operations.
Speaker Change: Edin, 15 carbo neutral plants to our footprint as part of our decarbonization plan.
Speaker Change: and we have reduced what a usage, per lit of beverage produced by over 7%. And through all these changes, we have created substantial value. Over the past five years, we generated.
Speaker Change: 68 billion rising free cash flow we expanded ROIC in achieved positive EVA every year.
As a result, we have returned over 43 billion reais to shareholders since 2020.
Andy S. of the Our Board approved a 2 billion reais share by back program.
Speaker Change: Demonstrating our discipline approach to capital allocation, and now we're believed that all these evolutions made our business better.
I am proud to say that we are accomplished on unpeller.
Speaker Change: and remarkable transformation as an SMCG company, the combination of a stronger portfolio, B's and Z delivery driven by our talented team put us in a solid position.
To tackle a much bigger addressable market in the future. We have built a stronger business with the stamina to go the distance. So thank you very much and now I will hand it over to Lucas.
Good day everyone. Our financial performance in the quarter was all about continuous growth and continuous improvement in terms of profitability. It bit the group 8.5% 8.7% Acc Argentina
Gros margin expanded 180 basis points organically, 220 basis points ex Argentina.
A bit the margin expanded 110 basis points organically.
130 basis points ex Argentina, and even though normalized profit declined around 11%, cash flow from operating activities grew a little over 2% totaling about 8.1 billion
What's more? Year to date, cash flow generation was pretty much in line with last year's despite having invested 1.7 billion rise in connection with a Dominican Republic put option back in January.
Additionally, we benefited from exchange rate fluctuations on cash held in our international operations.
Speaker Change: So let me cover our Beyond A bit of performance starting with Net Finance Results. Net Finance Results improved roughly 150 million reais versus 2023 with the same drivers as the first half of the year.
Speaker Change: First, lower losses on derivative instruments given lower carry costs to implement our hedging strategy for FX in Brazil.
Speaker Change: Second, lower-fair value adjustments of payables pursuant to IFRS 13 and CPC 46.
Speaker Change: and third, our hedging decisions and lower U.S. the exposure in Argentina. albeit to a lesser extent than in H1, which should continue to be the case in Q4.
Moving to income taxes.
Tax headwinds in Brazil once again impacted our net profit performance in the quarter. Our income tax expense totaled around 1.1 billion rise in 23, which was equivalent to a consolidated effective tax rate of almost 24%.
The two main drivers were consistent with H1.
First, hire EBT, which grew from 4 billion rise to nearly 4.7 billion rise.
2. Last deductibility related to state VAT government grants and IOC.
Regarding State VAT government grants, one important update.
In August and October, we obtained injunctions with respect to certain of our subsidiaries, which should help partially offset the adverse impact going forward.
Let me now provide a brief update in terms of litigation and the tax reform on consumption.
Regarding litigation, since our Q2 call, as per note 14 to our financial statements.
Favourable administrative court decisions, totalling about 2 billion rise became final in Q3.
Speaker Change: and we also obtain favorable administrative court decisions, totally about two billion reais that are not yet final and may be subject to appeal by tax authorities.
Speaker Change: And with respect to the tax reform on consumption in Brazil, we continue to expect the Senate to vote on the matter before your end. We will keep everyone posted as the legislative process progresses.
Turning to cashflow, we're off to a good start to the second half of the year.
Cashflow from operating activities totalled nearly 8.1 billion reais, almost 200 million reais above last year, with higher EBITDA, better working capital performance in Brazil, and net interest more than offsetting higher cash taxes.
Cashflow used in investing activities totaled approximately negative 1.1 billion rise with year over your performance mostly impacted by lower cappics.
And finally, cash flow from financing activities totaled about negative 1.1 billion rise, an improvement of 300 million rise versus Q32023 driven mostly by lower net finance costs.
Looking ahead.
Speaker Change: Q4 is critical in terms of cash generation, given the seasonality of our business.
Speaker Change: and we also face a tough comp because in Q4 2023, our cash generation benefited from one off-payables in Canada, in connection with the 100 year agreement for the long-term license you have grown in the country.
As this closed in note one of our 2023 full-year financial statements.
So we still have work to do on the cash flow front.
Speaker Change: Having said that, given the strong cash generation year to date, and the completion of the Share Buy Back Program announced earlier this year.
The Board has approved a launch of a new share-by-back program, totalling 2 billion reais, with the primary purpose of cancellation of shares, as a means to begin returning excess cash to shareholders this year.
Any shares that are not canceled may be held in Treasury, transferred and or cover any shared delivery requirements contemplated in our shared-based compensation plans.
1 final remark before handing it back to the operator.
Speaker Change: I would like to thank and congratulate our Finance, shared services and legal teams for receiving for the second year in a row, the 2023 Transparency Award by Anifaki, regarding the integrity and quality of our financial statements.
Well done team. Thank you and time for Q&A.
We will now begin the Q&A session. To ask a question, we kindly ask self-site analysts to click on raise hand button at the bottom.
Speaker Change: To remove a question from the queue, or after your question has been made, please click lower hand button. We reinforce our request that each participant asks only a single question.
Our first question comes from Isabella Simonato with Bank of America.
Thank you, good afternoon. Jean Lucas Lira.
Isabella Simonato: Congratz, John, on your work on Ambevette and all the bass in your new role.
Isabella Simonato: Um...
Isabella Simonato: My question is regarding pricing in Brazil.
Isabella Simonato: I think we, when we look at our checks, it seems that there were some weakness on pricing in September.
Isabella Simonato: and maybe not yet.
For a clear price movement in October, so I had of December season.
So I was wondering if you could give us a little bit more colour
on what can we expect in terms of pricing in Q4. In second,
Isabella Simonato: You showed that the focus brands are performing pretty well even in Antarctica performs well when we look at the core. So it leads us to believe that's called, was under greater pressure, right? We jumped on the fleet.
Speaker Change: Contributed negatively for the overall beer-von in performance. Also, if you could give us a little bit more collar and what's...
Speaker Change: is actually has been or the recent strategy on his call and if that's read is right that has been suffering a little bit more on the competition on the economy segment. Thank you.
So thank you Isabella, thank you for the words in for the question. Let's talk a little bit about Brazil, then I jump into your two questions, okay?
So Brazil beer had a solid performance this water. It was a mid-single, digital-pline growth with a margin expansion in the bottom of my growth.
We've seen the industry.
Speaker Change: is structurally better in general. We are seeing the industry growing and immunizing. We are seeing the true data.
that at the levels of today, our head just protect us.
But we are seeing aluminum and current-seeds going in a different direction for the next year.
So based on that, we're a strength of our business, we're the brands that are doing well with the solid commercial execution.
Speaker Change: We decided to take prices earlier during September and this is behind us now.
September, we suffered on volumes. We started better the Q3. We knew it was a conscious decision for us to lead.
and overall our focus brands.
Doing very well our innovation, performing very well for plus, working.
on Star Trek in Brahma, resilient. When we took the relativity off...
Speaker Change: and the core minus and as you mentioned, is called so for more than we expected, we believe that some are at some extent.
Speaker Change: This is short term, the things we will come back to normality in the future of October already has been almost that is coming to normality.
So I think I addressed a little bit of pricing and brand.
Speaker Change: The End
Speaker Change: Yes, and justify if I made a quick follow-up when you say you anticipated right the price movement in September. This is pretty much across the portfolio or it's more on the core.
Speaker Change: Good morning.
Speaker Change: That was pretty much across the Portugal.
Ok, thank you so much.
Our next question comes from Thiago Duaci with BTG.
You can open your microphone.
Thank you, hello, Lucas, hello, Jean. Yeah, it's thing to you, it was an honor to interact with you all these years and good luck on a many roles in the company.
and now to the question, I am...
I also wanted to tap on the pricing or maybe even better on the revenue per the market to let our discussion in Brazil be here.
Speaker Change: I appreciate the breakdown that you guys provide in the presentation when looking on a, on a year for your bases and, and, and, and based on that.
2 little questions. One, how much would you say premunization is pushing on the price mix?
Part of the equation, that would be the first.
Speaker Change: and the second of...
Speaker Change: If you could elaborate the best you can on how Revenue Prohecta Liter evolved on a Q Over Q Basis.
If we were to think of these three elements that you show in the chart there, Price Mix, ICM-Astaxes and others, that would be helpful to think on a sick quaint show basis instead of looking on Iurever year basis. Those will be my questions. Thank you.
Thank you, Dua, she's looking back, Q3, 2024, beer, natural revenue, and we're going back to the level 2.6% right.
Speaker Change: But the point is that we saw it to sequentially growing from Q2, Q3, right?
and that was what I mentioned that in one month in September we decided to move. The brand mix has been very positive, okay, so mix overall is positive with brand mix, very positive.
Speaker Change: and we have this part of Channos.
Speaker Change: That we are.
Speaker Change: Making to a conscious decision on expanding our whole sails at Neto.
Participation in our business once we have these implemented, that brings a bit of the mix.
Down, but in the end, this is a much lighter model that when we look at the distribution costs that are in a good moment on your good shape.
Speaker Change: and our co-opics investments because we do more of third part. So looking at me, pure brand me, it's doing very well and what more. And that's it, that's pretty much it.
That's how I'll thank you Jean.
Our next question comes from Robert Autonstain with Evercore.
Great, thank you very much.
I was wondering if you can talk a little bit about strategy at the lower end of the market now that you have a new competitor or that competitors come back.
Speaker Change: and by comparison in the US, you may be aware that more recently,
Speaker Change: ABI has given a lot of life to Bush light.
and really, you know, in the past, really had, you know, spent much time on brand building at the lower end. They've really got that brand going and it's been very additive to the overall growth.
and I know that you don't have a brain similar to that, you don't really have a large...
Value brand, but you know I'm just wondering if there are ways within your current portfolio as well as some of the local regional brands that you developed a few years ago with local ingredients.
that there's a way to sort of stem some of the losses at the low end of the market. Thank you.
Speaker Change: Thank you for the question Roberts.
Speaker Change: So Robert, let me give you a broader picture and then we jump into the opportunity that you mentioned. What is amazing about the market that we have here in Brazil? It is really pretty, pretty amazing.
and it is something that we see when you look at consumers a lot of interest.
Speaker Change: in our, in our, in the portfolio, in the category, our category continue culturally relevant.
We brought a lot of new propositions to the market that really
Speaker Change: Open, Arrgh!
The possibilities that our consumers have in terms of...
Speaker Change: A continuo, or coming.
Speaker Change: to the category we brought.
Speaker Change: For example, the cell appeal goes gluten-free that has like one million consumers that
They were out of the market before we launched it.
We are with a near beer, with beyond beer really addressing the palates and the sweet seekers. So the category is a very relevant rowing.
Speaker Change: and the biggest opportunity that we have. First of all, it's really win on the straight up. I think this is something that we've been very consistent for a while now with the brands and really should get the segments right.
and you win in high end and you build this corpus.
Opportunity that we see in other markets that we don't have it here. And then we made a conscious decision to maintain or to make or relevant. More than to play.
In the value segment. So that is a decision of our marketing, understanding what it is going. Our plan is really to maintain the core relevant.
for the future and the way you attack this opportunity that you mention is through the fact that it's strategy where we give more options with great brands.
Chukon's humor that somehow are short, and don't have the money, you have the right frequency on the ear.
and that's where we are working on for a while.
Speaker Change: We had drama growing.
HIGHSINGLE DEGETS IN DESCLOAR, we have Antarctica growing high single digits.
We have the distrattage of can bigger cans.
Speaker Change: and smaller RGB bottles, the two strategies are working on wood brands.
and that's how we believe a healthy business will be in the future. We have to keep the core relevant with the right of the ability and moving forward. What happened in Q3?
We believe that specifically in Q3, the moment that we decided to be ahead.
Speaker Change: This thing naturally happened.
We don't think there's something that we...
and that's it. We'll come back to some normal if you have our volumes.
and it's part of my...
of the strategy of the company to have the mainstream active, flat-ish growing. Okay, so this is the way that we want to tackle the opportunity of the Brazilian market and then on top of that there is a lot of growth.
On Quartless, a lot of growth, on premium, a lot of growth, on zero, a lot of growth, on on beyond beer.
Speaker Change: Can I just ask us a follow-up? So on those points, could you just give us maybe just a little bit of insight, early insight in terms of key innovations for, for 2025, maybe a little more detail on that.
Speaker Change: i
Speaker Change: Robert's so...
Speaker Change: Let me try to elaborate a little bit on the journey that we had here in innovation. You know that I'm betting a lot.
Speaker Change: in Innovation on the portfolio of the future. And this will look, looking back.
We had a moment that we decided to re-energize the core. So we had like Prama Duplomao, she helping the brun, the broma franchise.
At some point in time, we brought the international premium with a bolder proposition that was passing, that we picked one brand.
Speaker Change: In the whole world that we had, that really could have this position in this liquid, this relation, she could have the Brazilian consumer that we're looking for something stronger.
Speaker Change: and then we went.
Speaker Change: to...
A Back Expansion.
On the high end.
So we look at that corona and original and it's what two brands that they were bigger than what they were selling and then we gave more packs.
Speaker Change: for original and for Corona that they are doing very well because of that. And then we went on this.
Vision that now a time to do functionality in beer.
So somehow we strengthen our zero alcohol portfolio. Right now, so we just launched Corona, zero alcohol.
Speaker Change: Before the Olympics.
Speaker Change: We launched Budweiser, one year ago, and we launched gluten free low calorie propositions.
that it was a stellar pure-goat and make-alaboutra. So I would say that in a framework that we treat innovation here, that we have to follow innovation for three years, these are, that's where we are. We are betting on functionality in beer.
The Zero has a lot of whom we live this segment. The gluten free and low calorie, it's amazing the response that we are having in the market. We are...
Speaker Change: So, heavy users of beer are sticking with Nicolas Boot when in Stella Pugot because of the additional benefits.
Speaker Change: on calories on gluten-free. So I would say that the functionality of this virus, they fell through gold, make a lot of bootera, beyond the beer that we have.
that we have really bad in on would be the areas that we would continue to innovate.
Perfect, thank you very much.
Our next question comes from Lucas Fiheta with JP Morgan.
You can open your microphone.
Speaker Change: Hi everyone, thanks for the time. Jean, congrats on the move. We're going to meet you here in this conference call. My question is regarding the buyback and maybe too to Lucas.
and in the same context, Lucas of many discussions we had in the past of
I'm Vazanchaling, the future. I change in a little bit, it's kept us trucked or adjusting, maximizing and it's kept us trucked. So, the use of this, 2 billion reais, buyback as part of a sort of a, you know, maybe the initial stack of levring out the balance sheet of a Vaz.
Or it's just something puncture regarding the fricast flow generation having over the last 12 months and as you mentioned return to of a cast of shareholders.
and if it's potentially sort of a first step of, you know, every have to balance you to the company, why not do something bigger than 2 billion regarding the...
The Fortress DeBalachiepe of the company is today and the free cash flow generation. So that's my question to you. Thank you.
Okay, hi, good afternoon, Lucas. Thanks for the question.
Speaker Change: I would say that the decision to launch the Bibec program now is more related to the visibility that we have.
and less about the long-term capital structure of the company and the road map to reach an optimal capital structure for the company.
The discussion around capital structure has been a live discussion throughout the year with the MF board and it's going to continue through the end of the year.
Speaker Change: But...
Speaker Change: Descuit the capital structure discussion. When we looked at the cash generated year-to-date, what we held of excess cash on September 30th, we saw enough residual cash to start returning to shareholders this year on the one hand.
Speaker Change: and on the other hand when we look at the where the stock price is today.
Speaker Change: and compare that with...
Speaker Change: Our views on the intrinsic value of the company based on our plans Doing the financial analysis with the same rigor that we've
typically kind of applied for this type of exercise.
We concluded that investing now to Bill and Rai in our own shares is an attractive investment opportunity with plenty of scenarios to generate a return above and beyond either our.
Cross the capital and door our return on invested capital.
Speaker Change: So we continue to apply the same methodology we applied to looking at.
Speaker Change: Capital Allocation decisions and the Board concluded that the time was ripe to start returning access cash for the year through the form of a share-by-back program.
Ok, and as it relates to why not the bigger.
Speaker Change: Share-by-back program, keep in mind that under Brazilian law, their legal limits to the size of the float you can repurchase.
in our case that would total somewhere around 5.5 billion.
and when we compare the 5.5 billion, which is the legal limit.
and what we had a Vexas Cash at the end of the quarter, we thought to be kind of consistent with our historical approach as it relates to returning access cash to shareholders. Two billion was the right amount for this share-by-back program.
Speaker Change: and Perquillir. Thank you.
Speaker Change: Next question from Enrique Brustoling with Pladés Kobe VI.
You can open your microphone
Hello, dear Lucas, thanks for taking my questions on Jean-Géretre Congratulations and I wish you the best of luck in your next challenge
Enrique Brustoling: My question is about the contribution margins that you are seeing in premier one beer in Brazil.
Now that you have, you know, many of the brands that the company invested on over the past few years are gaining, I think more relevant scale. How do you see, you know, the profitability in the segment when compared to the mainstream more even to what it was in the past?
and when it comes to the growth that you are seeing how much this has been driving a change in the company's channel and packaging mix and how could these also be a driver of potential you know better margins going forward.
in part also driven, I think, on the RGB rollout for premium beers that I think had been in the strategy, that you mentioned in the past.
and I'll do this with my question. Thank you.
Speaker Change: Thank you, and he keeps thinking for the question. So, as I mentioned, so what is good about the Brazilian industry? It is that there is this.
Enrique Brustoling: Peel myzing, trans happening for a while.
Enrique Brustoling: and all the decisions that we did are for betting on the brands.
On the premium brands, speak the premium brands premium propositions in NoVase.
Bring new propositions. We have this great evenest mindset that we really check in general what we are launching, what is the role.
Enrique Brustoling: How consumers will interact but in the end, how this will be a crisis to our business.
and that's our mindset that is implemented. And when we come to the high end, so yes, you saw it.
Enrique Brustoling: What you mentioned is true. We started most of this brand.
Enrique Brustoling: and the High End Brands with own way of presentations.
Enrique Brustoling: De Corona, we have like the long next, right? And now the extension, the journey of the premium brands that we have.
General League of the direction of RGBs and this is even better for us. I don't know if you saw, but we begin to do the corona long next, our RGB.
Cruz, the delivery, right? So it's really something that makes...
Enrique Brustoling: All sense for a brand like Corona, that really embraces the world, how natural should be the world and sustainability. And we are moving to have if consumers want.
Propositions of returnability of the Corona Longenak in the market. So we are talking about bringing...
We launched it for example, Stella Pure Gold with a premium price.
Comfort with Stella. Now we are moving into propositions.
Enrique Brustoling: to RGB model. So what we see is that there is a lot of consumer connection to make, and there is a lot of volume to bring as the packs expands.
Speaker Change: That's helpful, you think so much.
Next question from Guilermi Palares with St. Andet. You can open your microphone.
Good afternoon everyone. Thank you, Jean, Lucas for taking the questions here. Just we should the best in your next position and we should have a career with more cheers. I question goes to Lucas, Lucas, you mentioned a lot about
Effect Data Company had a pretty strong cash generation, right? And if you could go through a bit on the taxation, it seems that the company reduced a bit of the tax recovery at this quarter. And if you could go through about a strategy of monetization of taxes, going for that would be super helpful. Thank you.
Hi Gileami, thank you for the question, Lucas here.
Speaker Change: I'm a little bit tired.
I think on the one hand we're still being impacted by the lower deductibility when it comes to government suspension given the tax changes at the end of last year.
I think the glass have full side of the story here is that as I mentioned in my prepared remarks, in August we obtain an injunction and in October we obtain another...
in Junction with respect to two of our subsidiaries.
and so going forward we should continue to see a benefit to partially offset.
Enrique Brustoling: The Impact that we've seen and when it comes to the IOC deductibility.
We do have much less deductibility, right? Have had and we'll continue to have, as compared to last year. But when you look at it from a cash flow perspective, we have, right, other means to offset.
Enrique Brustoling: This Lord deductibility by using other tax credits that we have available. We have north of 11 billion reais of defer tax assets.
Samovvich are more readily available in the short term. Others are more of a medium to long term.
Horizon for utilization. So that's why there is this difference between our effective tax rates, which has been going up.
Enrique Brustoling: and our cash flow generation, where it bit the growth, lower net finance results, working capital, lower capital.
have been able to offsets and even more than offsets, a higher cash tax bill in the quarter per day. So looking long-term, we still see and still like to remind folks.
Nat, an increase in our effective tax rates will not necessarily reduce our ability, right, to generate cash flows and subsequently return these cash flows to shareholders over time.
Enrique Brustoling: and Junque, that's very clear.
Speaker Change: Next question from Leonardo in Card with XP.
Speaker Change: You can open your microphone.
Leonardo: Hi Jean, hi Lucas
and both for the ball, the modulation on the genie's ear.
We will really keep track of your job on the Americas. I want to talk to you to follow up the first one on the competitive landscape. I appreciate all the color.
You'll give on the strategy, ring strategy and price and strategy. But that was how...
Big difference probably when we look in the 2005, things this year cost was a tailwind and we are expecting cost to be ahead me on the next year. I believe there is a small room for pricing, price high, so the premium and car-plus segments.
Speaker Change: and understand that working with packaging and pushing for increased volumes in carplers is a very...
and the sense of strategy against
here is focusing on mainstream, but then with this course in Greens for 2025.
and if we could expect...
Speaker Change: Well, probably a recovery on volumes on your side, if it makes sense even to consider that. But then I would appreciate some color on 2025s if this strategy continues and taking into consideration the cost perspective. And then the second follow-up was before our question I did on the second quarter.
Regarding Argentina, that if you've already seen the bottom margin, and look like volumes continue to decrease them, even if you're out performing the industry, the industry is kind of shrinking there. If you expect that to bottom this quarter, anytime soon, just together in DAF.
is the station that is supposed to stop towards your guy, a dragon on the results. Thank you.
Ok, thank you Leonardo, talking about a little bit.
Speaker Change: I will focus on the price as you mentioned before going up and we talked about the competitive landscape for a while now. So we remain nimble in our pricing strategy.
Focus on finding the sustainable balance between the natural and hyperactuality of growth.
Speaker Change: with medium to long-term rising strategy we didn't change.
We prioritize, we prefer price increase in line with inflation and then to have this favorable brand back-in-channel mix.
and with but we are looking at our course.
And we are here today as you mentioned this year has been a good year on the course side. And we know that aluminum and current impact will impact in the next year.
Speaker Change: We believe somehow that aluminum, we are the company less impacted.
by Aluminum on a weight, so somehow this is something that we'll get overall the category and we have a commitment to continue to expand margins.
Moving Forward. So I think that's the most I can say so we don't change our what we aim for pricing, but we are committed to margin expansion moving forward.
Just one one thing to add on my end with respect to the cost-out look.
Lernado, as I'm sure you'll appreciate right given our hedging policy, there's still some hedging taking place.
If you take a look at the picture, right, at the close of the quarter, directionally, the BRL is a headwind so far.
Aluminum is a headwind so far.
While on the other hand you have
Speaker Change: Porn, Sugar and Weeks, Motto Barley as Tailwinds.
Speaker Change: Ok, the Neto Neto is a headwind so far.
But this had wind is nowhere close to the sort of headwind we face.
Between 2022, okay, just to add some color there on the cross-style to look.
and then to jump into the Argentine question.
Speaker Change: Leonardo, the macro environment. We like when we see the numbers.
Speaker Change: of the country of controlling, controlling inflation, that's if it looks like.
is going in the right direction, the CPI desaleration, the gap reduction on the parallel effects and the facts in general.
Speaker Change: Ab...
But somehow we've seen impact on the consumer ability to continue buying FMCD goods in general. Okay? But having said that, we have a feeling that we've bought them.
Speaker Change: Ian
Eper and A, that was really the bottom. This quarter we understand, there was some sequential improvement. And we believe that we're going to continue to have sequential improvements moving forward.
The Good Part, it is that the Q4 of Q-24, as I mentioned, Q-3, Q-233 was my toughest comp.
But when we go to Q4 2020, for Argentina already on the operation in the bit of performance was already suffering.
Last year, so somehow now we're going to begin to cycle with.
and still in prevention, still not where the industry works, but sequentially improving and we're far easier.
PNL for us to go when we compare. So I think next year we'll be a good year for Argentina now, it's about getting sequentially better.
In Q4 of last year, we had to reflect the devaluation of the current, the Argentinean peso, and we also had to.
Speaker Change: Catch up!
Speaker Change: Q1, 2 and 3
Speaker Change: and so there was a material impact in our last.
Speaker Change: reported figures.
Speaker Change: and I recall correctly north of 1.2 billion reais in Q4 for Latin America's south. And now we cycle that. So in organic terms it's a different conversation but in nominal terms we cycle this easy
Speaker Change: and the first time I've ever seen a man in the world.
Ok, that's what our information. Thank you. Thank you for under both of you.
Next question from Hinata Cabral with City.
Speaker Change: You can open your microphone.
Speaker Change: Hi, thank you so much for taking my question and doing congrats for all the achievements and leadership I have done by the WISU of the success in your new role.
Mike question is to get a view on these two strategic fronts.
Juan, on the delivery, you have a mention of some new initiatives recently.
If you could elaborate a little bit what the company has made.
I especially dizzy and no fortune on it's there.
Speaker Change: and on the other front, the RGB, especially in Brazil and Argentina, where affordability is really important at this moment. Thank you.
Juan: Ok, thank you very much Renata for the words and for the question.
So, yeah, so let's talk about the delivery. I was happy that this day there was a narchical in a newspaper that mentioned that millenniums, right, that were born in between 1980 and 1995.
They really put Zed delivery as a top.
Juan: Retail Brand
In Brazil and that's a great achievements for us.
The brand is a love of a brand
It is not just about the marketing of the brand, it is about really delivering the proposition of 30 minutes code beer, the right price to our consumers. But there is really something that consumers really appreciate the new generation.
Juan: and this will just get better. Okay, is that the liver will just get better. We are super excited about it. So, is that the liver, it has an early basis.
25 million yearly active users.
So this is the number of consumers that go into Zen by something and survey a prize.
Juan: and understand something. On the monthly basis, recurrence, we have 4.9 million, that is 5% that really go there and buy something. So the GMV is growing 14%.
It's super important to deliver for our mega-brand strategy, somehow our brands are performing super well, spot in Corona.
In Zadelevery, RGB continues to have a kill role in Zade.
Juan: So bringing the convenience.
and something that's very unique for the delivery and it represents, I don't know if you know this number.
Juan: More than 45% of the delivery platform volumes, they are RGB. That's why we elect to start the coronavirus RGB project.
for the consumers that are more conscious about their impact in the world through the delivery. So we are really beginning on that front.
Juan: In No.
Juan: We are moving to expand a sort of a delivery. So the marketplace.
of other products that are not ours.
That they are really growing, they are growing at a 30% rate in GMD. And finally, now for a year, we are monetizing.
This piece of the equation, there is this marketplace that's in the delivery is offering.
and so really excited about the delivery.
Juan: and connected with your second question. It's an important place on the RGB in whom play that we are doing with RGB. And RGB is doing well and we are bringing more and more premium propositions for the RGB.
Speaker Change: So I think I went over the two questions, right? Yeah, yeah, that was very helpful, thanks so much for the call.
For more next question from T. Cardu Alvis with Morgan Stanley.
You can open your microphone.
Hey everyone, Jean, it's been a pleasure. Thank you so much for the caller for your energy on the calls. Really appreciate it. I have two follow-ups as most of my questions have been answered.
First of all, on the call, beyond the implied contraction of the brand, I'm curious going forward, Jean, what is the strategy for the brand?
You know, we all know that it's not being a focus brand with discussed the brand in many different ways in the past, but even the size.
To your portfolio, it still should have a role. I'm curious about any updates on the role that's called going to have maybe protecting the lower end of the core.
You mentioned a couple of times keeping your core relevant. How is it called playing that role for you going forward on your core brands? That's the first follow-up. The second follow-up on revenue predictor leader would be...
Speaker Change: In spite of the mix evolution of their brands in the quarter, the price move that you mentioned in September, we still noticed the discount as a percentage of girls' revenues increase in the third quarter. So I just want to refute good.
Speaker Change: and Labarade on that, specifically, you know, if there is something more a significant belief that would have explained more, discount or promotion activity, maybe a specific segment or channel that could explain that that would be helpful, color as well under discounts. Thank you so much.
Juan: Ok?
Speaker Change: Ok, thank you Ricardo for the question. So, the good question about school, right? So, as I mentioned, I want the core, my segment, stable when growing, ok. And when you look at my core brain.
Compared with 2019, I'm growing 12%.
So it's a cakeer of something close to 2% in the combination of the core brands.
Speaker Change: Brom is really leading, so that's our brand.
So the brand that we elected.
Juan: the Megabran to lead this journey of Residion Brandt.
and it is growing ahead of it. And in making it clear that grommas are a priority for us to get the core growing and health. We have to maintain.
Juan: De Consumers, that loves call today. So our strategy is to really maintain the consumers that we have today, of course, that the consumers are...
Juan: More and more with more products in their basket
They are trying new propositions they are trading up, but we want to really maintain the lovers that we have for a score today.
The second question that was about discounting.
So no
There is no difference.
Juan: on what we've been.
Juan: Doing for now one, our price has been our level of discounts. They are not that high.
We reduced the loss.
Juan: During time.
Somehow the Q3, we grew 2.9% versus last year.
Juan: It was mainly driven by revenue management initiatives with the price to consumer growing in line with inflation and then brand mix bringing a positive.
Impact, that was partially offset by higher ZET, tax flow bases and channel mix. So no big difference, no change. We just did it. Took a decision ahead of what we used to do.
Juan: As I always mentioned that we were nimble and seen the opportunity, so no big difference on that thought.
Speaker Change: Ok, thanks a lot, thanks a lot.
Juan: Thank you so...
Speaker Change: This concludes the Q&A session. I would like to invite Mr. Jesite Satchi to proceed with his closing remarks. Please go ahead, sir.
Ok, thank you very much as we finished the school I would like to thank.
Speaker Change: The whole ecosystem that we are part of.
First of all I'd like to thank my colleagues.
The Unbevitable Group of talented people.
focusing on meeting, consumer needs and helping our ecosystem to thrive is being a huge pleasure working with you all.
I also want to thank our clients who believe in our products and help deliver them to our consumers who choose us, to our suppliers and partners. Thank you for your support and for believing in our transformation to take us to even better place.
Speaker Change: Finally, my thanks goes to each of you analysts and investors for the time we spend together your trust, own a feedback and partnership have been invaluable on this journey. We have shared, it has been a privilege.
Speaker Change: We are more than prepared for the future and the best news is that this progress does not stop here.
Speaker Change: Carlos Listo Boa is coming, is a note friend.
Speaker Change: Someone I've known for over 20 years
and with his experience, business knowledge.
Speaker Change: Patience for the Brands. I am confident he is the right person to lead our company forward. I really, so please really welcome this bowl with the same warm you showed me. So thank you very much and see you soon.