ABEV Ambev SA

Ambev S.A. [B3: ABEV3; NYSE: ABEV] announces its results for the second quarter of 2020. The following operating and financial information, unless otherwise indicated, is presented in nominal Reais and prepared according to the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and to the accounting practices issued by the Brazilian Accounting Standards Committee ("CPC”) and approved by the Brazilian Securities and Exchange Commission (“CVM”). The information herein should be read together with our financial information for the six-month period ended June 30, 2020 filed with the CVM and submitted to the U.S. Securities and Exchange Commission (“SEC”).

OPERATING AND FINANCIAL HIGHLIGHTS

Net revenue: Net revenue was down 10.4% in 2Q20, with volume declining by 9.4% and decline in net revenue per hectoliter (NR/hl) of 1.0%. Net revenue was down in Brazil (-6.7%), Central America and the Caribbean (CAC) (-33.9%), Latin America South (LAS)1 (-8.7%) and Canada (-3.9%). In Brazil, volume was down 4.4% and NR/hl was down 2.5%. In CAC, volume declined by 39.4% and NR/hl grew by 9.1%. In LAS, volume was down 16.5% and NR/hl rose by 9.4%. In Canada, volume increased by 0.3% while NR/hl decreased by 4.1%. In HY20, on a consolidated basis, net revenue was down 6.0%, with volume decreasing 7.4% and NR/hl growing by 1.6%.

Cost of goods sold (COGS): In 2Q20, COGS and cash COGS (excluding depreciation and amortization) were up 10.0% and 9.9%, respectively. On a per hectoliter basis, COGS grew by 21.4% while cash COGS was up 21.3%, mainly due to inflationary pressures in Argentina, transactional currency headwinds and package mix impacts. In HY20, COGS and cash COGS increased by 9.7% and 10.1%, respectively. On a per hectoliter basis, COGS rose by 18.5% while cash COGS was up 18.9%.

Selling, general & administrative (SG&A) expenses: SG&A and cash SG&A (excluding depreciation and amortization) were down 4.4% and 7.5% despite inflationary pressures in Argentina. The decrease was mainly driven by actions aimed at reducing our discretionary expenses across all our operations. In HY20, SG&A grew by 1.8% while cash SG&A decreased 0.6%.

EBITDA, gross margin and EBITDA margin: In 2Q20, EBITDA reached R$ 3,348.3 million, which corresponds to an organic reduction of 33.6%, with a gross margin of 50.0% (-930bps) and EBITDA margin of 28.8% (-990bps). In HY20, EBITDA was R$ 7,580.8 (-25.6%) with gross margin and EBITDA margin reaching 52.7% (-680bps) and 31.3% (-830bps), respectively.

Normalized profit and EPS: Normalized profit was R$ 1,372.6 million, 49.4% lower than in 2Q19, due to lower EBITDA and higher financial expenses. Normalized EPS in the quarter was R$ 0.08 (-49.3%). In HY20, normalized profit decreased by 52.5%, reaching R$ 2,600.4 million, with normalized EPS of R$ 0.15 (-54.0%).

Cash generation and CAPEX: Cash flow from operating activities was R$ 1,838.8 million (-41.0%) and CAPEX reached R$ 807.1 million (-9.9%). In HY20, cash flow from operating activities totaled R$ 3,382.8 million (-34.9%) and CAPEX increased by 49.4% to R$ 2,153.5 million.

Financial highlights - Ambev consolidated R$ million	2Q19		2Q20		% As Reported		% Organic		YTD19		YTD20		% As Reported		% Organic
Volume ('000 hl)	36,865.2		33,465.6		-9.2%		-9.4%		78,161.6		72,477.1		-7.3%		-7.4%
Net revenue	12,145.1		11,615.3		-4.4%		-10.4%		24,785.3		24,217.9		-2.3%		-6.0%
Gross profit	7,183.8		5,813.5		-19.1%		-24.5%		14,716.3		12,772.9		-13.2%		-16.7%
% Gross margin	59.1%		50.0%		-910 bps		-930 bps		59.4%		52.7%		-670 bps		-680 bps
Normalized EBITDA	4,691.3		3,348.3		-28.6%		-33.6%		9,811.9		7,580.8		-22.7%		-25.6%
% Normalized EBITDA margin	38.6%		28.8%		-980 bps		-990 bps		39.6%		31.3%		-830 bps		-830 bps
Profit	2,615.9		1,271.3		-51.4%				5,365.0		2,482.6		-53.7%
Normalized profit	2,712.1		1,372.6		-49.4%				5,474.5		2,600.4		-52.5%
EPS (R$/shares)	0.16		0.08		-51.4%				0.33		0.15		-55.3%
Normalized EPS (R$/shares)	0.17		0.08		-49.3%				0.34		0.15		-54.0%

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

For additional information, please contact the Investor Relations team:

Thiago Levy+55 (11) 2122-1415thiago.levy@ambev.com.br

Felipe Trotta+55 (11) 2122-1414felipe.trotta@ambev.com.br

ri.ambev.com.br

1 The impacts resulting from applying Hyperinflation Accounting for our Argentinean subsidiaries, in accordance to IAS 29, are detailed in the section Financial Reporting in Hyperinflationary Economies - Argentina (page 21).