Q1 2025 Ambev SA Earnings Call
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Speaker Change: FIFA Club World Cup promises to shake for.
And the country of football is with Budweiser too.
Speaker Change: Brazil is the country with the most teams in the championship.
Speaker Change: Okay.
Speaker Change: And with our most fans too.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: And this is going to be huge.
Speaker Change: It all starts with the arrival of the trophy.
Speaker Change: Our World Class Trophy deserves World Class protection.
Speaker Change: That's why Budweiser called up defenders, who don't let anything through.
Speaker Change: [music] fans will be challenged to breakthrough the defensive wall and our proprietary event in Rio de Janeiro.
Budweiser will also take fans to see the trophy at the final of the FIFA Club World Cup 2025.
Speaker Change: Yes.
Speaker Change: And what about the fans staying in Brazil.
Speaker Change: Will they celebrate too.
Speaker Change: We're bringing back the biggest hit from the 2022 World Cup.
Speaker Change: Budd containers are coming to Brazil.
Speaker Change: Unlocking loads of hash tag free Budd for the fast.
Speaker Change: At this club World Cup, our fans won't stop celebrating with Budweiser.
Speaker Change: As a blood cells in Sao Paolo and Rio de Janeiro.
Speaker Change: Okay.
Speaker Change: And I'll close with our special championship bottle.
Speaker Change: When it comes to football.
Speaker Change: Yes.
Speaker Change: No one to celebrate Blake Brazilians right.
Speaker Change: Budweiser.
Speaker Change: The official beer of the FIFA Club World Cup 2025.
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Speaker Change: Good afternoon, and thank you for waiting we would like to welcome everyone to embed 2025 first quarter results conference call.
Carlos Lisboa: Today with US we have Mr. Carlos Lisboa, and bad CEO and Mr. <unk> <unk>.
Speaker Change: <unk> and Investor Relations Officer.
Speaker Change: As a reminder, this conference presentation is available for download on our website IR dot ambev dot com BR as well as through the webcast link.
Speaker Change: We would like to inform that this event is being recorded and all participants will be in a listen only mode. During the company's presentation.
Speaker Change: After <unk> remarks are completed there will be a Q&A session during which we kindly ask that each participating sell side analysts ask only one question.
Speaker Change: Before proceeding let me mention that forward looking statements are being made under the safe Harbor of the Securities Litigation Reform Act of 1996.
Speaker Change: Forward looking statements are based on the beliefs and assumptions of Ambev management and on information currently available to the company. They 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.
Speaker Change: 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.
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.
Speaker Change: Unless otherwise stated percentage changes refer to comparisons with 2024 first quarter results.
Speaker Change: Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly as part of embeds normal activities.
Speaker Change: As normalized figures are non-GAAP measures the company discloses the consolidated profit EPS operating profit and EBITDA on a fully reported basis in the earnings release.
Speaker Change: Now I will turn the conference over to Mr. Carlos Lisboa. Mr. Lisboa you may begin your conference.
Speaker Change: Good afternoon, everyone.
Speaker Change: Thank you for joining our first quarter 2025 earnings call.
Speaker Change: I am truly delighted to be here with you today.
Speaker Change: This quarter was particularly significant for me.
Speaker Change: So this is my second earnings call.
Speaker Change: Mark My.
Speaker Change: The first three months, leading this organization.
Speaker Change: From the very beginning we have focused on three key objectives that define magnesia here.
Speaker Change: First avoid disruptions second maintaining momentum and third build a stronger company.
Speaker Change: And I'm pleased to share that we keep costs maintaining momentum in delivery a solid step towards making 2025, another successful year for ambev.
Speaker Change: And this is why we had a good start to the year.
Speaker Change: Top line remained resilient rising by high single digits with a 0.7% volume growth achieving all time high levels for our first quarter and net revenue per hectoliter, increasing by roughly 6% supporting gross margin.
Speaker Change: Expansion of 150 basis points.
Speaker Change: EBITDA grew by double digits with 180 basis points margin expansion.
Speaker Change: And we delivered a really flat net income.
Speaker Change: The soft comparison, given last year's tax one off.
Speaker Change: Such results were driven by our consistent execution and performance across each pillar of our strategy.
Speaker Change: Regarding pillar, one lead and grow the category.
Speaker Change: Our volumes grew half of our main markets, which represent almost 80% before our consolidated volumes bolstered by carnival festivities at the beginning of March.
Speaker Change: Like beer Carnival is culturally relevant to several Latin American countries, especially in Brazil.
Speaker Change: Since your categories image by joining a national passion with one of the most anticipated celebrations of the year.
Speaker Change: This infusion of the Carnival as a mega platform combined with our efforts to bring more consumers into more beer occasions resorted Ian first our core beer segment performed in line with where our Bowlsby emotional for me markets. According to our ASP.
Speaker Change: <unk> two.
Speaker Change: Or are both core brands, increasing volumes by high single digits, three hour nakahara beer brands improving volumes by mid Thirty's.
Speaker Change: And finally, our Mega brands growing volumes by mid single digits, while gaining brand equity in eight of our top 10 markets.
Speaker Change: As for pillar to digitize and monetize our ecosystem.
Speaker Change: Now that we became a distal enabled company, we have been working to better meet our customers and consumer demands.
Speaker Change: Strength in your core business, while also beauty new growth engines.
Speaker Change: On the <unk> front, we have been expanding our transactions by obese not only through an increase in the number of customers using the platform, but also by boosting the quantity of product suite.
Speaker Change: In the quarter, mostly exits buyers rose by high single digits and S. SKU ratio improved by low single digits versus last year.
Speaker Change: On the marketplace side, our GMB grew by 60% with the number of customers for chasing known wombat products, increasing by low teens.
Speaker Change: As for DTC front does that the lever for few nearly 17 million orders in the quarter.
Speaker Change: 5% increase versus last year, enhancing our understanding of consumer behaviors.
Speaker Change: These enable us to address consumer needs, such as our affordability and convenience.
Speaker Change: By offering the brand they love and the returnable glass bottle at home.
Speaker Change: Evidenced by our higher RGB mix than we have in our total business.
Speaker Change: And a wider assortment of products and brands, especially from premium segment, which holds more weight than.
Speaker Change: And then we have in our total business.
Speaker Change: The more the delivery has also be helping us develop new products here. Our most recent innovation beats Red mix is a good example.
Speaker Change: It was developed based on consumer surveys regarding liquid and packaging conducted through the platform and has become the biggest launch among the beats flavors, both AUM and offset.
Speaker Change: And in pillar III.
Speaker Change: <unk> our business the.
Speaker Change: The synergy of our topline performance the digitalization of our business and our disciplined approach to managing costs and expenses translated into the Sam.
Speaker Change: Second quarter of consolidated EBITDA growth together with margin expansion.
Speaker Change: Additionally.
Speaker Change: EBITDA growth led to generation of $1 2 billion of cash flow from operating activities, an increase of 68% versus last year as well as a slight EPS increase.
Speaker Change: Looking ahead.
Speaker Change: Indicated by our guidance for Brazil beer cash Cogs per hectoliter, we expect to face a significant FX and commodity pressure starting in Q2, which present an important challenge for us Nonetheless.
Speaker Change: We'll continue to pursue our ambition of expanding consolidated margins in the year.
Speaker Change: As we continue to consistently implement our growth strategy across our footprint homes again, most of our business units delivered EBITDA growth and margin expansion in the quarter.
Speaker Change: Let's take a closer look in the commercial performance and highlights of our main markets in Brazil, we delivered record volumes for first quarter in both beer and Nab on top of a strong performance from last year.
Speaker Change: In beer volumes remain resilient, increasing by <unk>, 7%.
Speaker Change: A more dynamic consumer environment, the activation Mafara brands resulted in the carnival with the highest volume in our history.
Speaker Change: Both core portfolio of brands composed mainly by Corona, Stella Artois spotting regional and Budweiser represents roughly 30% of our volumes and holds the leadership of this segment.
Speaker Change: Our premium Super premium brands grew in the twenties, while in the core plus Budweiser rose by high teens.
Speaker Change: In the core segment, Brahma and Antarctica jointly increased volumes by mid single digits.
Speaker Change: On top of that no cohort beer volumes expanded by approximately 40%.
Speaker Change: As for net revenue per hectoliter.
Speaker Change: Performance resulted from the timing of our price increase after Carnival later this year, coupled with a lower carryover from last year.
Speaker Change: Nevertheless, it grew by two 5%.
Speaker Change: Which was ahead of our anticipated Cogs per hectoliter, driving a 260 basis points improvement.
Speaker Change: Our gross margin.
Speaker Change: Our revenue management decisions in the quarter.
Speaker Change: With us in a good position for the year in the light of increasing cross pressures in the coming quarters.
Speaker Change: In Brazil, Nab double digit topline performance was driven by volume growth from non sugar CSD and sport drinks.
Speaker Change: Paul with our revenue management initiatives.
Speaker Change: Volume rose by three 2% with Guarana, Antarctica zero and Pepsi Black growing by mid Twenty's in mid Thirty's, respectively. We also.
Speaker Change: We estimate to have gained market share with dean carbonated soft drinks.
Speaker Change: Moving to loss in Argentina, we continue to deliver sequential improvement in volumes led by beer business.
Speaker Change: As the overall consumer environment remains on a recovery track the beer industry declined by low single digits in the quarter and our market share remain virtually flat. According to our estimates while our Mega brands improved brand health.
Speaker Change: We are ready to lead and shape near future category growth in Argentina.
Speaker Change: Turning to CAC in the Dominican Republic, while cycling, our toughest comp from last year volumes declined by mid single digits impacted by a softer macroeconomic environment as well as a wide price relativity compare.
Speaker Change: <unk> to other alcohol categories, we remain confident about the beer category health and our business fundamentals in the country.
Speaker Change: Lastly, in Canada adverse weather conditions, and Easter phasing impacted industry volumes. However, we estimate to have gained market share in the quarter with our Mega brands rising volumes by low single digits. Thanks to the performance of Michelob Ultra and <unk>.
Speaker Change: <unk>.
Speaker Change: Now, let's take a look at our financial performance in more detail.
Speaker Change: Following lucas' departure I am pleased to invite <unk>, our new CFO and Investor Relations Officer.
Speaker Change: Welcome to the team.
Speaker Change: We are counting on you to lead our value creation journey over to you now.
Speaker Change: Thank you Liz bore Hello, and good afternoon, everyone.
Speaker Change: For those of you I haven't yet met it's a pleasure to connect with you today.
Speaker Change: It is a true honor to become CFO of <unk>.
Speaker Change: Now with the opportunity to help leaves board and the team to lead this new chapter of our company.
Speaker Change: Before officially joining Ambev I had already been working closely with the company for several years, having participated in important transactions dating back to the late nineties as an external advisor since.
Speaker Change: Since joining the company nine years ago, I had the privilege of working several positions and building deep relationships, both locally and globally.
Speaker Change: Started at <unk> head of M&A later, serving as finance director of our Brazil, Nab Division and Dan I spent the last six years at AB Inbev, mostly as global VP of M&A and business development.
Speaker Change: I would also like to take a moment to thank Luca leader for his contributions over the past few years.
Speaker Change: Now turning to this quarter's performance.
Speaker Change: Let me start by saying that we kick it off 2025, maintaining momentum with solid operational and financial performance.
Speaker Change: Today I'll focus on three things.
Speaker Change: <unk> capital allocation.
Speaker Change: Net income and third our cash flow generation.
Speaker Change: On capital allocation yesterday, we announced that there are no other intermediate dividend of 2 billion reais to be paid in July totaling 4 billion rising dividends already announced in 2025.
Speaker Change: This reinforces our commitment to returning cash to shareholders, while maintaining financial flexibility.
Speaker Change: Our normalized net income in Q1, 2025 totaled $3 8 billion reais flattish compared to last year, driven by strong EBITDA growth offset by net financial results and higher income taxes.
Speaker Change: Our net financial results totaled minus 856 million in Q1, 2025 worsening by $450 million a year on year, driven mainly by three effects.
Speaker Change: One the appreciation of BRL during the quarter led to FX losses in BRL from hard currency cash balanced translation.
Speaker Change: Two <unk>.
Speaker Change: Cost to upstream cash from Argentina, and Bolivia, which impacted demand derivatives line and.
Speaker Change: And three in Brazil.
Speaker Change: Widening of interest rate differential.
Speaker Change: Duane this cell leak in the fed funds raised a carry cost on our FX hedging strategy for further information. Please refer to note 22 of our intermediary financial statements.
Speaker Change: Turning to taxes.
Speaker Change: Our effective tax rate in the quarter reached 21, 7% versus 15% in Q1 2024.
Speaker Change: This was primarily driven by a one off benefit.
Speaker Change: $215 million ish book it in the fourth quarter of last year.
Speaker Change: If we were to adjust for these one off normalized net income in the quarter would have grown by 6% year on year.
Speaker Change: Now, let me walk you through our cash flow statement cash.
Speaker Change: Cash flow from operating activities totaled $1 2 billion.
Speaker Change: In Q1, 2025, a six 8% increase year on year, primarily driven by EBITDA growth and lower cash taxes paid resulting from lower IOC in 2024.
Speaker Change: Regarding net working capital despite receivables improving by 626 million Reais.
Speaker Change: Cable was worsened by 1 billion Reais, mostly due to later barley payments last year in Argentina.
Speaker Change: Cash flow from investing activities reached minus $784 million Reais and improvement of 56% versus Q1 2024, primarily due to the impact of short term investments performed last year.
Speaker Change: And capex reach it.
Speaker Change: 828 million Reais, a proximately, 18% lower year on year.
Speaker Change: Reflecting our continued focus on disciplined capital deployment.
Speaker Change: Cash flow from financing activities totaled minus <unk> eight 8 billion Reais driven mainly by $6 6 billion in dividends paid in the first week of January and $1 2 billion in shares repurchased.
Speaker Change: Part of our ongoing share buyback program out of which we reached 65% by the end of the quarter to summarize we've started 2025 with momentum we remain focused on delivering sustainable value creation to our shareholders through diligent execution.
Speaker Change: Fusion of our capital allocation priorities. Thank.
Speaker Change: Thank you for your time today I'm looking forward to connecting with you in person in the coming weeks with that let me hand, it back to this board.
Speaker Change: Thank you <unk> <unk>.
Speaker Change: And as we approach the end of my remarks, I would like to leave you with a final thought.
Speaker Change: At our company, we believe that a successful journey begins with a solid start.
Speaker Change: Q1 was an important first step in year's acuity, all three pillars of our growth strategy across our markets and setting the tone in the pursuit of making 2025, another important year within our value creation Jordan.
Speaker Change: At the same time, we remain grounded.
Speaker Change: Operating environment remains dynamic and some of our markets and we will focus on what we can control, while staying flexible and agile to navigate and adapt to the challenge that may lie ahead.
Speaker Change: Before we move to Q&A I want to share a thrilling experience from last weekend.
Speaker Change: Corona celebrated its 100 year anniversary Ed and then later fine Lady Gaga concert for over 2 million people on the beach of Copa Cabana here <unk>.
Speaker Change: While music is a big passion point for Brazilians <unk> lifestyle represents what the brand stands for.
Speaker Change: It is not a coincidence that in the last couple three years Corona has been the fastest growing premium brand in the state with Brazil, representing one of the largest markets for the brand outside Mexico.
Speaker Change: And there is more to come we are enthusiastic about our mega platforms calendar.
Speaker Change: In June the first FIFA Club World Cup sponsored by Budweiser.
Speaker Change: Two of the greatest fashion points in Latin America will connect again.
Speaker Change: Soccer.
Speaker Change: And beyond.
Speaker Change: The team and I are ready for this exciting journey ahead.
Speaker Change: You for your attention and now ill hand, it back to the operator for the Q&A.
Speaker Change: We will now begin the Q&A session to ask a question, we kindly ask sell side analysts to click on race hand button at the bottom of the screen.
Speaker Change: So even though the question from the queue or after your question has been addressed please click lower hand button.
Speaker Change: We kindly reinforce our request that each participant ask only a single question.
Speaker Change: Our first question comes from and he keeps studying with Bradesco BBA.
Speaker Change: Yeah.
Carlos Lisboa: Hello, Lisboa clearly thank you for taking my questions.
Speaker Change: They want the point I would like to explore our prices in Brazil beer during the quarter.
Speaker Change: Especially how we should think about it as a proxy in terms of how we should carry that over into the coming quarters right.
Speaker Change: And the reason I ask that is that you are cycling now easier price comps given the change that happened last year and we continue to say the next special relatively in line with what you had in previous quarters.
Speaker Change: And in the release you mentioned the mismatch of the pricing calendar in the quarter. So I mean, if you could qualify it or what's behind the price performance far Brazil beer in Q1, and if there were any more relevant one off there that'll be really helpful. Thank you.
Speaker Change: Hello, everyone again, and thanks for joining the call. Thanks for the question.
Speaker Change: Let me articulate a little bit about.
Speaker Change: The pricing right in Brazil beer.
Speaker Change: But first and foremost I think is always geared to emphasize that.
Speaker Change: It's really important for us.
Speaker Change: To change the picture, we saw last year end of last year quarter four.
Speaker Change: Growing volumes five seven right, which is a pretty important improvement so with that in mind, we do consider that was.
Speaker Change: An important solid first step into our journey to lead and grow our category right.
Speaker Change: In Q1 net revenue grew by two four as I mentioned right with revenue management is a combination of revenue management initiatives and brand mix that was also.
Speaker Change: Really solid in the quarter right and.
Speaker Change: Net revenue was partially offset but what I mention right. During my my E true.
Speaker Change: Which was a mismatch in the pricing calendar versus last year quarter, one and.
Speaker Change: And also a lower carryover from last year right, However, having said that.
Speaker Change: I want to reinforce that net revenue per hectoliter will continue to be a key driver.
Speaker Change: Order to help us progressing with our margin expansion.
Speaker Change: In the year right.
Speaker Change: Uh huh.
Speaker Change: And it's also important to mention here that what we took in terms of RASM revenue management decisions so far.
Speaker Change: Right in the right position a good position for what we need.
Speaker Change: Uh huh.
Speaker Change: The year to come right.
who's fallen, right? Different from the past.
Speaker Change: Nowadays, we have a way stronger for foot, not only the core, but also.
Speaker Change: The new capabilities that make way more effect of the way, we manage promotions, we managed to discounts.
Speaker Change: A way more granular approach than before.
Speaker Change: Okay.
Speaker Change: That's very clear thank you very much.
Speaker Change: Our next question comes from Thiago Duarte with BTG.
Speaker Change: Hello, Hello, everybody this bore three.
Speaker Change: Pleasure to speak to you both yes. My question comes from from the statement. This board that you made in your prepared remarks, you mentioned briefly about this just now with regards to your expectation or reinforcing your expectation for margin expansion.
Speaker Change: <unk> on a consolidated level this year.
Speaker Change: If if I may I would like to hear how you think the contribution from each geography can be to that and particularly beer, Brazil right. So you talked a bit about your above revenue per hectoliter being a key driver.
Speaker Change: For margin expansion in the year.
Speaker Change: And so I'm curious about how you expect your Brazil to play a role in that margin expansion throughout the year and if I may.
Speaker Change: Second question.
Speaker Change: And then it's more of a broad one.
Speaker Change: And based on your experience and back to Brazil, now Lisboa can you talk a little bit about how you see.
Speaker Change: Affordability of beer in the country today.
Speaker Change: Because it's it's it's pretty remarkable how many times you are reinforcing the role of Ambev is leading and fostering implementing the category.
Speaker Change: And looking at dogs, those relative prices today seems to be important to understand how much more pricing or promotion or pricing force. When do you think he is going to have to be given in order to ferment growth so beer profitability sorry.
Speaker Change: Sorry, affordability would be would be the second question. Thank you so much.
Speaker Change: My pleasure <unk>.
Speaker Change: Let me elaborate a little bit about the first then ill jump into the second point right.
Speaker Change: So regarding margin.
Speaker Change: Expansion rate I think is always important to emphasize.
Speaker Change: That.
Speaker Change: <unk> 2025 will be very different from the previous two years right because especially in 24, what we saw was a tailwind. This year, we're going to have more a sort of a headwind in costs.
Speaker Change: So we knew since the very beginning that we would need.
Speaker Change: A different approach in order to right.
Speaker Change: Land and of this year.
Speaker Change: Accomplishing what we expect in terms of ambition right financial ambition, So first and foremost our ambitious to continue the margin expansion right now.
Speaker Change: The second point that I want to emphasize as default.
Speaker Change: <unk>.
Speaker Change: Always keep in mind that our growth strategy is a combination of one lead and grow the category that connects to the second point too right.
Speaker Change: And monetize and optimize our business.
Speaker Change: The emphasis we are putting in the pillar three this year.
Speaker Change: As a consequence of what I said before is different because we know that the cost impact, especially in Brazil will come within the range that we have.
Speaker Change: We gave you all five to five to eight to five so.
Speaker Change: So it's a very different kind of scenario vis vis what we had last year for instance, right. So we're going to need.
Speaker Change: The combination of the three pillars.
Speaker Change: We're working together.
Speaker Change: All markets so to your point about.
Speaker Change: One specific market.
Speaker Change: Bringing more than than the audits not necessarily what we expect we expect all of them.
Speaker Change: Evolving simultaneously, you'll know in making the combination of the three pillars.
Speaker Change: <unk> point of difference the true competitive.
Speaker Change: We want to grow creating value.
Speaker Change: And this will be a very interesting year for us challenging year to make this ambition a reality.
Speaker Change: Right and I can't give you the chest to 242 also elaborate a little bit more about what is behind this ambition.
Speaker Change: No.
Speaker Change: Protecting margins this year on the productivity front, but what I can.
Speaker Change: Make very clear for you always default.
Speaker Change: One of the privilege that I have coming back to Brazil has the chance to work.
Speaker Change: With.
Speaker Change: Very powerful group of talents the depth of talent that we have here is really unique and has a very powerful point of differentiation of Ambev right and this group of people.
Speaker Change: Except that the challenge in the end of last year understanding the reality that we would face in 2005.
Speaker Change: We all and I'm.
Speaker Change: On behalf of the team emphasizing here, we embraced the costs right and every single leader of our organization understand the needs of delivery number one together with number two with number three.
Speaker Change: And it probably I'm going to say something that you already know about us, but when we put something.
Speaker Change: Front of US we usually make it happen. So this is something that really makes me feel confident about.
Speaker Change: And my last comment about productivity as the fall along the years, we have promoted a deep transfer.
Speaker Change: Transformation in many different areas of our organization here and all transformed all kinds of transformation.
Speaker Change: It provides you the opportunity to calibrate a little bit in.
Speaker Change: And in those calibrations, there is a lot of fed.
Speaker Change: So the role we are playing the mission.
Speaker Change: As a group is to go there and calibrate and bring the value that we understand there is embedded in <unk>.
Speaker Change: All P&L of all markets.
Speaker Change: In all countries, where <unk> operates.
Speaker Change: To your second point about.
Speaker Change: Affordability. This is a very interesting aspect you are bringing it to the discussion Thiago.
Speaker Change: And when I compare going back to your comment about category being a true category the category champion right, whereas some people.
Speaker Change: They come to me with the.
Speaker Change: Impression that okay. There is very little room for you guys to grow that's not the way I see it honestly speaking because when I compare the profile of the category not only Brazil, but other regions that we have right. We operate with beer markets, we do see opportunities.
Speaker Change: We do see gaps.
Speaker Change: Which had CMS posted the guests.
Speaker Change: Sick patients one of the gaps right, we have a lower participation level for instance, in Brazil than in Mexico and Colombia.
Speaker Change: On the occasion, and it's pretty much the same.
Speaker Change: Right when I compare the frequency of consumption in Brazil with other important market similar in a seamless stage maturity stage. There is also a gap.
Speaker Change: <unk> is our role as leaders of the category right to develop the right portfolio to turn those consumers that's not necessarily yet connected to our category.
Speaker Change: More occasions, right and two going straight to your point about affordability one of the opportunities we have life at the end of the bottom of the pyramid right. So in the beauty about having a portfolio.
Speaker Change: Like we have today is the fact that you can play the end game.
Speaker Change: You can continue developing.
Speaker Change: The high side of the portfolio right the premium side that both core side of the portfolio while.
Speaker Change: Promoting accessibility for consumers that do need them.
Speaker Change: And you can and rework capable of doing so EMEA Americas right.
Speaker Change: Move ahead, right protecting the shelf wallet of the category, while reducing working minutes to buy beer for those who need that.
Speaker Change: And Thats, the magic and Thats why you need a portfolio.
Speaker Change: Composed by stronger brands.
Speaker Change: Right assortment of Skus, because again that will bring Q optionality.
Speaker Change: 30.
Speaker Change: Thank you for the Bora and Tiago, great to reconnect with you here I would just add by saying that I am extremely happy to be back into my country and be part of our lives bullets team here on this new journey.
Speaker Change: Beth.
Speaker Change: From a financial perspective, what I think is very important for us to have in mind.
Speaker Change: Helping this bolt on.
Speaker Change: As working towards deliver on our ambition that we mentioned before is three things one is when you look into our cost.
Speaker Change: A very good visibility given our forex and commodity is the way we hedge our business.
Speaker Change: The second is that we are very focused on what we control and this should not be new for anyone on this call because it is part of the DNA of our country Our company and the third is they also working with the different functional areas on productivity levers. So the combination of visibility.
Speaker Change: Focus on what we control and productivity is how I believe will help us throughout this journey.
Speaker Change: Yeah.
Speaker Change: Very helpful and complete answers. Thank you so much thank you.
Isabella <unk>: Our next question comes from Isabella <unk> with Bank of America.
Isabella <unk>: Hello, Hi, Lisboa floaty. Thank you for taking my question.
Speaker Change: Like two.
Speaker Change: Two to talk about a little bit that the topline of beer in Brazil in Q1.
Speaker Change: And if you could elaborate a little bit more of how do you see that the sell out volumes during the quarter. If that's similar to what we saw in terms of sell in.
Speaker Change: And.
Speaker Change: Regarding that I mean, I understand that there was a price pick up right as the quarter ended.
Speaker Change: Rich.
Speaker Change: It basically was a delayed right given the calendar of the carnival. So.
Speaker Change: Can you can you give them some indication write off type what type of price increases.
Speaker Change: We could we could see sequentially in Q2, and how you're thinking about that I think that would be.
Speaker Change: My first question the second one in the release you mentioned about the performance of several brands right as you expose here to Bud Brahma Antarctica. I was wondering how is the this call tragic tragic story going I mean last quarter, you mentioned right that Ah.
Speaker Change: As Carl could no longer underperform as it did in 2024, so I wonder if there was already any type of change in direction as seen in Q1, and finally just quickly on the Capex side right. There was as you guys mentioned, a very steep decline year over year can we assume that type of.
Speaker Change: Of of contraction year over year for the full 2025.
Speaker Change: Thank you so much.
Speaker Change: Uh huh.
Speaker Change: In Q2, Isabella it's a long question, so let me break in basis and.
Speaker Change: I am going to kick off talking a little bit about the second one right call.
Speaker Change: I think the BMO.
Speaker Change: I think is always important to emphasize that we have here.
Speaker Change: To play in the category of game.
Speaker Change: Not to play a brand game.
Speaker Change: However.
Speaker Change: Play the category again with.
Speaker Change: The level.
Speaker Change: Of leadership position that we have right.
Speaker Change: It's.
Speaker Change: It's fundamental to have a stronger portfolio of brands right again to attend more consumers right to drive beer choice since into more consumption occasions for longer with us.
Speaker Change: Higher value.
Speaker Change: So in essence, we believe.
Speaker Change: Is that an effective portfolio strategy.
Speaker Change: Is the best way of doing so.
Speaker Change: And what happened in the first quarter two and your point is the fact that both core segment performed strongly.
Speaker Change: Strongly very strong growth base.
Speaker Change: However, the quarter decline.
Speaker Change: Oh single digits, but im in Antarctica, continuing with the both with good momentum.
Speaker Change: But the score was the primary driver.
Speaker Change: The core volume decline right.
Speaker Change: However, we believe that our strong core.
Speaker Change: Core segment.
Speaker Change: It means a strong grower.
Speaker Change: <unk>.
Speaker Change: Right is always good for us to keep that in mind as well because by having a noise.
Speaker Change: A stronger core allows you to develop your category and bring more equipment valid from the development.
Speaker Change: Our compensation.
Speaker Change: So that's the reason why in our previous call. We made the emphasis right about skoal, so skull and I'll point of view remains.
Speaker Change: Important cornerstone of our portfolio.
Speaker Change: In terms of relevance is as relevant as promise and.
Speaker Change: And by the way is our leading brand in many different states of Brazil, right and on top of that.
Speaker Change: What the brand stands for.
Speaker Change: Emotionally and functionally.
Speaker Change: It's a lot with the what the category since for resilience.
Speaker Change: That's why in our point of view is so important to put the brand brand back on the right trajectory.
Speaker Change: Which.
Speaker Change: Before 'twenty four.
Speaker Change: Was on the right direction.
Speaker Change: <unk> from 19% to 23, the brand was growing in a very healthy base right and the.
Speaker Change: In 2004.
Speaker Change: <unk> growth was reported right.
Speaker Change: And that's the reason why we made very clear for your wall that we won.
Speaker Change: To fix what the.
Speaker Change: The portfolio strategy brought in terms of negative impact for the brand right without <unk>.
Speaker Change: Stopping the momentum of the rest of our portfolio, which by the way is getting stronger and stronger.
Speaker Change: So since the beginning of the year, we have we have Matt what's in our according to our learnings didn't work well for the brand and we are acting tackling one by one in order to put the brand back on that.
Speaker Change: Growth trajectory over time, we were not expecting skull to reverse completely within the quarter.
Speaker Change: Okay.
Speaker Change: So.
Speaker Change: About the first point right.
Speaker Change: Q4.
Speaker Change: I mentioned that.
Speaker Change: I think as part of my first answer was.
Speaker Change: Very.
Speaker Change: Now, let me call. It this way for the for the industry in Brazil, right and we told you all that the industry performance was heavily impacted by a very adverse weather.
Speaker Change: Alright.
Speaker Change: And that's one of the reasons, we see our industry back on track in 'twenty five beginning of 'twenty five because.
Speaker Change: We had a normalized weather versus last year versus versus historical levels right.
Speaker Change: Which emphasize.
Speaker Change: How strong and how resilient the beer industry in Brazil.
Speaker Change: <unk>, a very dynamic operating environment, which is intrinsic.
Speaker Change: To many of our emerging markets, where we operate right.
Speaker Change: In their sell out volumes were slightly positive in the quarter pretty in line with our performance and that's why we are.
Speaker Change: We emphasized that our market share was pretty much stable right on a quarter basis.
Speaker Change: Good to see that you know the fastest.
<unk> a partition off the category driving the growth is the premium amortization right.
Speaker Change: Very interested to see premium amortization are both core array, representing 30% of the industry and 30% of our volumes as well.
Speaker Change: Thanks to the fall in a very interesting here.
Speaker Change: That you know.
Speaker Change: We are as a consequence, not only leaders within the core but also leaders in the above core segment.
Speaker Change: In market share and brand equity and in growth rate.
Speaker Change: Right so.
Speaker Change: Our portfolio together and again, we are a company that believes in the power of the portfolio.
Speaker Change: Bringing us a very solid momentum.
And they're both quite right and this is driving a lot of momentum for the industry as a whole because we are.
Speaker Change: Bring a different sort of the experience different experiences right than we could previously promote for Brazilians okay.
Speaker Change: I Hope I answer your question now I am going ahead and it over to <unk>.
Isabella <unk>: Isabella great to connect with you, let me take the opportunity to mention that capex and invest behind our business and organic.
Isabella <unk>: Organically is one of our capital allocation priorities and that will continue to be the case going forward. Unfortunately, I cannot give you any guidance on capex going forward, but let me tell you one thing we've been even more discipline along the years to do two things one is to maximize our footprint.
Isabella <unk>: Of our assets in any given country in which you operate and we are being even more diligently look into business cases, and both factual investments and that is something that will continue to be the case going forward.
Isabella <unk>: That's very clear thank you.
Isabella <unk>: You.
Isabella <unk>: Okay.
Isabella <unk>: Yeah.
Isabella <unk>: Our next question comes from Lucas behavior with JP Morgan.
Speaker Change: Lucas you can open your microphone.
Lucas: Sorry, guys I Hope you hear me now.
Lucas: Okay. Thanks, I have one question about cash distribution to shareholders, you announced the dividend yesterday.
Speaker Change: I'm wondering too to hear your thoughts about this topic the company a super liquid generating a lot of cash.
Lucas: And it seems like Youre going through a moment of.
Speaker Change: No.
Speaker Change: Good.
Margin expansion and results. So my question is if you if you see room for <unk>.
Speaker Change: Expanding further cash distributions to shareholders.
Speaker Change: And eventually going even above 100% payout.
Speaker Change: What's on eventually.
Speaker Change: Changing a little bit the leverage of the company going through.
Speaker Change: By leveraging process of the balance sheet, if that could make sense given your.
Speaker Change: Your cost of debt I would assume it is.
Speaker Change: Pretty competitive.
Speaker Change: Wondering how to think about that to help to think about this as sort of a full year cash it can be sent to shareholders, including including the buybacks. Thank you.
Speaker Change: No great Lucas. Thank you. Thank you for your question I think.
Speaker Change: It is important to remind ourselves and we said that on the prior call that we were reviewing potentially increase on intermediate dividend throughout the year and I think what we just announced it last night connect with that right.
Speaker Change: We have done our intermediary dividend announcement on the beginning of the year closing of 2024 and now we announced another one this is part of our continuous review.
Speaker Change: Process about when you look into our cash in hand, when you look into dividends to be paid buyback restricted cash. This will be an ongoing exercise that we're going to be doing throughout the year, having said that I cannot comment for you exactly how we're going to be doing that but bear in mind. There are three things for us all.
Speaker Change: Is that we think about how to return cash to our shareholders and deliver sustainable growth on that one is IOC. The second one is dividend that third one is share buyback and we are always going to take those three into consideration that.
Speaker Change: That is as much as I can mention to you on this call.
Speaker Change: I hope that answers.
Speaker Change: Thank you for your thank you very much.
Speaker Change: Our next question comes from Jeremy <unk> with something that.
Speaker Change: Good afternoon, Carlos and thank you for taking the question just a quick one here on Argentina, you guys mentioned in last call.
Speaker Change: And that could see some normalization of that market and we had to pay versus yeah. If anything your floor I'd like your thoughts on that.
Speaker Change: Performance of 2025, we already see your comments with Atlas.
Speaker Change: Administration on the press release about it so like some some figures going forward or do you expect from the Argentina market. Both in terms of volumes and also on the pricing side.
Speaker Change: As inflation is this thank you.
Speaker Change: Thank you very much.
Speaker Change: Let me kick off the answer saying the following we are very positive about Argentina future.
Speaker Change: I think it's important for us to emphasize that.
Speaker Change: Several economic indicators are improving sequentially.
Speaker Change: Not a coincidence, but a consequence that the industry also improved sequentially.
Speaker Change: Despite the decline in low single digits.
Speaker Change: But taking consideration that we are lapping the toughest comp.
Speaker Change: In 2004, it right in the first quarter.
Speaker Change: Our volumes pretty much in line with the industry performers. So we estimate.
Speaker Change: Have maintained.
Speaker Change: Stable our market share.
Speaker Change: We continue doing what we always do which is meant we are here for the long run right. We continue to invest in our brands.
Speaker Change: Making.
Speaker Change: During the portfolio right for the future to come.
Speaker Change: We continue to see improvement in brand health of our Mega brands in Argentina. This is great because we as I said before.
Speaker Change: We see it.
Speaker Change: Uh huh.
Speaker Change: The direction moving towards where.
Speaker Change: Well, we want the digression to be and we with all of that we are confident about being ready to lead and shape the category recovery in the country right.
Speaker Change: In terms of strategy no difference.
Speaker Change: The other markets right, where we operate 123 right.
Speaker Change: The formula of success right and pricing to your question is part of the pillar number one pillar number three pillar number two right.
Speaker Change: And what I can say is our revenue management plan is being executed exactly as we designed to for the beginning of this year. So we feel confident that we can move forward.
Speaker Change: As I said before leading shaping right the category and the business to where we were.
Want the business to be in the future.
Speaker Change: Thank goodness.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Leonardo Allen card you can open your microphone.
Bob: Ali it's Bob.
Speaker Change: Thanks for taking my question and congratulations on the results I would like to hear a little bit market regarding the cost then you have the <unk>.
Speaker Change: Guidance for the $5 five to wait five increase for this year, but the first part was really positive on that side and you even mentioned that we should expect the cost pressure to start on the Q2, but then just understand it should be a very steep increase for cost in order to reach that guidance.
Speaker Change: Looking at the outlook now.
Speaker Change: The lower range of the guidance.
Speaker Change: Feasible or even lower than that.
Speaker Change: Just understand.
Speaker Change: So the markets and on top of that since you have a delayed impact of cost because of the hedging strategy, we've probably already seen the competitors facing these higher costs and maybe push to increase prices and even when we look at volumes for the first part of this year.
Speaker Change: We saw the industry data coming down and some competitors mentioning lower performance and you managed to increase <unk> comments on the release that you followed the industry. So just to understand both sides, if you're already seeing the effects of higher cost affecting margins and even affect me.
Speaker Change: <unk>.
Speaker Change: Price pass through in order to secure margins in affected volumes in gears, but then you mentioned that the industry grew in the first quarter. Despite.
Speaker Change: Despite the data for the industry not seen the same but just understand that and if you are more comfortable with the guidance the cost guidance. After the first quarter. That's it. Thank you.
Lisboa: No not at all thank you for your question Lisboa here, So I'm going to just make one comment and I'm going to hand, it over to Florida right.
Speaker Change: And the comment is the following the alcoholic beverage industry production in Brazil declined low single digits in first quarter and the first quarter.
Lisboa: Remind the following.
Lisboa: [noise] intercept production is a good proxy for performance when we look through the cycle not necessarily in the short term.
Lisboa: Won't talk about our competitors I'll speak about US right first quarter was a tough comp for us.
Lisboa: The strong production of last year as we entered 2024 with a very low inventory level and we increased production right double digits during the quarter and that's the reason why right you'll see the decline for Ambev against last year.
Lisboa: Now to flourish.
Lisboa: Lisboa.
Lisboa: Just to add on as Boyds answer I think it's important for us to remind ourselves how we viewed our planning scenarios and costs and given that we have good visibility on FX and commodity it was no surprise for us that in Q1 in beer, we would continue to have that tailwind. So that's number one.
Lisboa: Number two is like we are.
Lisboa: Continuing from working on productivity efforts and other things related to what we control that we could potentially.
Given upside, but at this moment I cannot comment anything different than maintaining our cost guidance that we have given to you at the beginning of the year from five five to eight and a half.
Lisboa: As time progresses.
Lisboa: Maybe we can have a further discussion on that for now that's what it is.
Lisboa: Okay. Okay. That's great that's great. Thank you.
Lisboa: Thank you.
Lisboa: Yeah.
Speaker Change: This concludes the Q&A session I would like to invite Mr. Carlos Lisboa.
Carlos Lisboa: Proceed with his closing remarks. Please go ahead Sir.
Carlos Lisboa: Thank you for joining our call today.
Carlos Lisboa: This quarter performance had a good shape and our point of view.
Carlos Lisboa: Volume and net revenue per hectoliter growth.
Carlos Lisboa: Ross and EBITDA margin expansion and the slightly higher EPS.
Carlos Lisboa: Abuse grew EBITDA and almost all grew margins.
Carlos Lisboa: Cash flow was strong and we continue returning cash to shareholders.
Carlos Lisboa: Looking forward, while our operating environment remains dynamic we continue pursuing our ambition to expand margins in the year.
Carlos Lisboa: This was just a quarter, but for US. It is a reason to believe in the potential for growth.
Carlos Lisboa: <unk> strategy for the quarters to come.
Carlos Lisboa: Thank you and hope to see you soon.
Carlos Lisboa: Yeah.
Carlos Lisboa: This concludes today's presentation you may disconnect and have a nice day.
Carlos Lisboa: Goodbye.