Ambev(ABEV)2025-03-12 21:16Economic Indicators - Brazilian GDP growth was 3.4% in 2024, up from 3.2% in 2023 and 3.0% in 2022, indicating a positive trend in economic conditions [447]. - Brazilian unemployment rate decreased to 6.8% in 2024 from 7.8% in 2023 and 9.3% in 2022, reflecting improved labor market conditions [448]. - Brazilian inflation, measured by IGP-M, was 6.5% in 2024, compared to a deflation of 3.2% in 2023 and inflation of 5.5% in 2022, indicating rising cost pressures [451]. - The real depreciated against the U.S. dollar by 27.9% in 2024, following appreciations of 7.2% in 2023 and 6.5% in 2022, which may create inflationary pressures [452]. - Argentine GDP contracted by 2.6% in 2024, marking the second consecutive year of decline, with inflation rates reaching 117.8% [458]. - The average exchange rate for the Argentine Peso against the U.S. dollar was ARS 916.75 in 2024, reflecting significant depreciation [456]. Company Financial Performance - Net sales increased by 12.2% in 2024, reaching R$89,452.7 million compared to R$79,736.9 million in 2023, driven by a 13.3% growth in net revenue per hectoliter [475]. - Sales volume decreased by 0.9% to 181,920.5 thousand hectoliters in 2024 from 183,659.0 thousand hectoliters in 2023, primarily due to declines in Latin America South and Canada [475]. - Gross profit rose by 13.3% to R$45,837.6 million in 2024, with a gross margin improvement to 51.2% from 50.7% in 2023 [473]. - Net income slightly decreased by 0.8% to R$14,847.0 million in 2024, resulting in a net margin decline to 16.6% from 18.8% [473]. - Brazilian operations net sales increased by 4.8% to R$48,605.3 million, with volumes growing 1.5% to 128 million hectoliters, marking a historical high [477]. - Latin America South operations saw a significant net sales increase of 43.7% to R$19,829.7 million, driven by a 59.6% rise in net revenue per hectoliter [481]. - Cost of sales increased by 11.0% to R$43,615.1 million, but as a percentage of net sales, it decreased to 48.8% from 49.3% [485]. - Net revenue per hectoliter for total operations increased by 13.3% to R$491.7 in 2024, with notable increases in Latin America South (59.6%) and NAB (9.2%) segments [477]. - Canada operations net sales increased by 4.8% to R$9,993.9 million, supported by an 8.2% increase in net revenue per hectoliter despite a 3.1% decline in volume sold [482]. Tax and Credits - The company recognized R$19 billion in tax credits from the exclusion of ICMS from the PIS and COFINS calculation base from 2017 to 2024 [465]. - In 2024, the company recorded a positive impact of R$2,533.9 million in net revenue due to hyperinflation accounting adjustments in Argentina [463]. - The company has R$607.5 million in tax credits related to IRPJ and CSLL taxes unduly paid over SELIC interest, pending judicial proceedings [467]. - The company recorded R$3,243.1 million in tax credits for 2024, compared to R$3,040.4 million in 2023, reflecting gains from tax incentive programs [564]. - The total amount deferred in tax benefits as of December 31, 2024, was R$372.2 million, with a current portion of R$145.1 million [564]. Operational Changes and Market Dynamics - The impact of COVID-19 led to significant changes in market dynamics, with a notable increase in e-commerce sales despite restrictions on on-trade channels [468]. - Strategic revenue management initiatives contributed to the growth in net sales across various segments, particularly in Brazil and CAC operations [480]. Expenses and Income - Sales, marketing, distribution, and administrative expenses increased by 12.6% in 2024 to R$26,392.4 million [494]. - Other net operating income rose by 21.1% in 2024 to R$2,457.3 million, primarily due to higher VAT tax credits [502]. - Income from operations increased by 15.8% in 2024 to R$21,801.7 million [504]. - Net finance result improved, decreasing by 35.8% in 2024 to an expense of R$2,318.2 million [505]. - Consolidated income tax expense totaled R$4,640.4 million in 2024, with an effective tax rate of 23.8% [507]. Cash Flow and Debt - Cash flows generated from operating activities increased by 19.7% in 2023, to R$24,711.4 million from R$20,642.1 million in 2022 [553]. - Cash flows used in investing activities increased by 15.2% in 2023, to R$5,766.0 million from R$5,004.2 million in 2022 [554]. - Cash flows used in financing activities decreased by 1.4% in 2023, to R$16,115.2 million from R$16,337.8 million in 2022 [555]. - As of December 31, 2024, the total net cash position was R$26,384.9 million, an increase from R$12,835.1 million in 2023 [557]. - Short-term debt as of December 31, 2024, totaled R$1,276.4 million, with 27.0% in foreign currencies, compared to R$1,298.1 million and 19.6% in foreign currencies in 2023 [558]. - Long-term debt as of December 31, 2024, was R$2,176.3 million, with 28.0% in foreign currencies, down from R$2,203.0 million and 28.7% in foreign currencies in 2023 [560]. Leadership and Governance - Ambev's CEO, Carlos Eduardo Klutzenschell Lisboa, has been with the company since 1993 and has held various leadership positions, including Global Vice President for Global Brands [599]. - Lucas Machado Lira serves as the Chief Financial, Investor Relations, and Shared Services Officer, having joined Ambev in 2005 and held multiple leadership roles [600]. - Leticia Rudge Barbosa Kina is the Legal and Compliance Vice President, with a background in law and economics, and has been with the company since 2002 [601]. - Ricardo Morais Pereira de Melo, the People and Management Vice President, has been with Ambev since 1996, holding various sales positions [602]. - Eduardo Braga Cavalcanti de Lacerda, the Commercial Vice President, has been with the company since 2001 and has held various roles including Non-Alcoholic Vice President [603]. - Valdecir Duarte, the Industrial Vice President, has been with Ambev since 1998 and has held several engineering and supply chain management positions [604]. - Paulo André Zagman, the Logistics Vice President, joined Ambev in 2002 and has held various roles including Chief People Officer [605]. - The Board of Directors includes independent members and experienced executives, enhancing governance and strategic oversight [593]. - The company has a strong focus on leadership development, with many executives holding advanced degrees and specialized training [599][600][601][602][603][604][605]. Compensation and Share Plans - The total compensation for all members of the Board of Directors, Executive Officers, and Fiscal Council in 2024 amounted to R$177.1 million, including fixed and variable remuneration, benefits, and share-based payments [614]. - The average compensation for Executive Officers in 2024 was R$11.7 million, with a maximum of R$46.3 million [617]. - As of December 31, 2024, there were 72.5 million stock options outstanding under the Ambev Stock Option Plan, covering approximately 528 employees [618]. - The Share Based Payment Plan allows for the granting of up to 3.0% of Ambev's share capital, with 120.5 million Restricted Shares offered to approximately 519 participants as of December 31, 2024 [630]. - The average individual compensation for members of the Board of Directors in 2024 was R$3.1 million, with a maximum of R$14.3 million [617]. - The total number of Board of Directors members in 2024 was 13, with 7 members compensated for their service [617]. - The variable remuneration for Executive Officers in 2024 was R$19.5 million, contributing to a total of R$152.7 million for this group [615]. - The minimum individual compensation for Executive Officers in 2024 was R$6.5 million [617]. - The Share Plan includes provisions for Restricted Shares and Performance Shares, which vest in three to five years depending on the program [630]. - The Board of Directors has the authority to manage the Share Plan and establish terms for each Share Based Payment Program [627]. Pension Plans and Profit-Sharing - As of December 31, 2024, Ambev had 8,896 participants in its pension plans, including 220 in the defined benefit plan and 7,448 in the defined contribution plan [637]. - The expenses under the profit-sharing programs amounted to R$1,431.3 million for the year ended December 31, 2024, compared to R$963.5 million in 2023 and R$1,119.2 million in 2022, indicating a significant increase [642]. - Ambev adopted a clawback policy on October 19, 2023, allowing recovery of incentive-based compensation from executives in case of financial restatements, applicable to compensation received after October 2, 2023 [632]. - The defined contribution pension plan covers substantially all new employees, while the defined benefit plan has been closed to new participants since May 1998 [634]. - The profit-sharing plan's variable payments are based on achieving corporate, departmental, and individual performance targets, with a three-tier distribution system [640]. - Ambev's pension plan assets are primarily composed of equity securities, government and corporate bonds, and real estate properties [637]. Shareholder Engagement - The company held individual and group meetings with shareholders and analysts in 2024 to discuss business performance and growth opportunities [643]. - The IAPP (Ambev Private Pension Institute) manages the pension plans, which are independent and benefit solely the employees [634]. - The company has a collective award system for operational employees based on performance at production sites and distribution centers [641]. - No ABI exceptional stock options or restricted stock units were outstanding or held by Ambev executives as of the date of the report [633].