ABEV Ambev SA

Ambev S.A. (B3:ABEV3) (NYSE:ABEV) announces today its results for the 2018 second quarter. The following operating and financial information, unless otherwise indicated, is presented in nominal Reais and prepared according to International Financial Reporting Standards (IFRS), and should be read together with our financial information for the six-month period ended June 30, 2018 filed with the CVM and submitted to the SEC.

OPERATING AND FINANCIAL HIGHLIGHTS

Net revenue: Top line was up 11.4% in 2Q18, with volume increasing by 2.6% and net revenue per hectoliter (NR/hl) by 8.6%. Net revenue growth in most of our operations, including Brazil (+9.3%), Central America and the Caribbean (CAC) (+16.2%) and Latin America South (LAS) (+25.6%), was partially impacted by Canada (-2.0%). In Brazil, volume resumed growth (+1.5%) and NR/hl increased by a healthy 7.7%. In CAC, volume and NR/hl grew by 10.8% and 4.9%, respectively. In LAS, volume was up 4.9% and NR/hl rose by 19.5%. And, in Canada, volume decline of 2.7% was partially offset by NR/hl growth of 0.8%. In HY18, on a consolidated basis, net revenue was up 8.5%, with volume declining by 1.9% and NR/hl growing by 10.7%.

Cost of goods sold (COGS): In 2Q18, COGS and cash COGS (excluding depreciation and amortization) were up 6.7% and 6.5%, respectively. On a per hectoliter basis, COGS (COGS/hl) was up 4.0% while cash COGS grew by 3.8%, mainly due to inflationary pressures in Argentina and higher commodities prices, partially offset by favorable FX in LAS and Brazil. In HY18, COGS and cash COGS increased by 3.3% and 2.8%, respectively. On a per hectoliter basis, COGS rose by 5.3% while cash COGS was up 4.8%.

Selling, general & administrative (SG&A) expenses: In 2Q18, SG&A and cash SG&A (excluding depreciation and amortization) were up 9.6% and 10.3%, respectively, above our weighted average inflation (approximately 7.2%). This is mostly due to higher concentration of marketing expenses incurred in connection with the 2018 FIFA World Cup Russia™. In HY18, SG&A and cash SG&A grew by 8.2% and 8.3%, respectively.

EBITDA, gross margin and EBITDA margin: EBITDA reached R$ 4,534.0 million (+16.7%) in 2Q18, with gross margin of 61.9% (+170bps) and EBITDA margin of 39.4% (+180bps). In HY18, EBITDA was R$ 9,172.7 million (+13.2%), with gross margin and EBITDA margin reaching 61.8% (+200bps) and 39.6% (+160bps), respectively.

Normalized profit and EPS: Normalized profit was R$ 2,348.5 million in 2Q18, 9.7% higher than in 2Q17, as the EBITDA organic growth and a lower tax rate were partially offset by higher net financial expenses. Normalized EPS in the quarter was R$ 0.14 (+11.0%). In HY18, normalized profit increased by 11.3%, reaching R$ 4,959.4 million, with normalized EPS of R$ 0.30 (+12.3%).

Cash generation and CAPEX: Cash generated from operations in 2Q18 was R$ 3,518.7 (+45.6%) and CAPEX reached R$ 805.1 million (+7.2%). In HY18, cash generated from operations totaled R$ 6,061.6 million (+9.7%) while CAPEX is declining by 2.5% to R$ 1,277.8 million.

Payout and financial discipline: Year to date, we have paid/announced R$ 3.6 billion in dividends. As of June 30, 2018, our net cash position was R$ 5,774.4 million. This figure does not include the dividend payment of R$ 0.16 per share (approximately R$ 2.5 billion) announced on May 15, 2018, to be paid as of July 30, 2018.

Financial highlights - Ambev consolidated					% As		%						% As		%
R$ million	2Q17		2Q18		Reported		Organic		YTD17		YTD18		Reported		Organic
Volume ('000 hl)	35,660.3		36,551.1		2.5%		2.6%		76,965.4		75,466.6		-1.9%		-1.9%
Net revenue	10,268.0		11,509.5		12.1%		11.4%		21,509.8		23,149.8		7.6%		8.5%
Gross profit	6,219.8		7,122.3		14.5%		14.5%		12,938.4		14,301.8		10.5%		12.0%
% Gross margin	60.6%		61.9%		130 bps		170 bps		60.2%		61.8%		160 bps		200 bps
Normalized EBITDA	3,943.3		4,534.0		15.0%		16.7%		8,299.5		9,172.7		10.5%		13.2%
% Normalized EBITDA margin	38.4%		39.4%		100 bps		180 bps		38.6%		39.6%		100 bps		160 bps
Profit	2,124.8		2,424.2		14.1%				4,414.7		5,021.8		13.8%
Normalized profit	2,141.5		2,348.5		9.7%				4,457.5		4,959.4		11.3%
EPS (R$/shares)	0.13		0.15		15.0%				0.27		0.31		14.6%
Normalized EPS (R$/shares)	0.13		0.14		11.0%				0.27		0.30		12.3%

Note: Earnings per share calculation is based on outstanding shares (total existing shares excluding shares held in treasury).

 

Contact:

Investor Relations - Ambev S.A. 
ir@ambev.com.br / andre.thomaz@ambev.com.br 
+55 11 2122 1414