Ambev SA ADR(ABEV) - 2023 Q3 - Quarterly Report

Financial Performance - Normalized EBITDA increased by 43.7%, with significant growth in Latin America South (LAS) at 93.9% and Central America and the Caribbean (CAC) at 62.3%[3] - Cash flow from operating activities rose by 29.7% compared to R$ 6,109.4 million in 3Q22, driven by Normalized EBITDA growth and improved working capital performance[4] - Net revenue grew by 19.3%, marking the 13th consecutive quarter of double-digit growth, with net revenue per hectoliter increasing by 21.7%[9] - Normalized profit increased by 25.1% to R$ 4,038.9 million, supported by lower financial expenses due to reduced hedging costs[6] - The gross margin expanded by 210 basis points, while the Normalized EBITDA margin expanded by 560 basis points, indicating improved profitability[10] - Year-to-date net revenue increased by 21.9%, with Normalized EBITDA up by 39.6% and gross margin expansion of 230 basis points[9] - The company reported a normalized EBITDA margin of 26.1% for Q3 2023, reflecting a 740 basis points improvement year-over-year[14] - Normalized Operating Profit for Q3 2023 was R$ 347.9 million, with a margin of 19.3%[16] - The company reported a normalized operating margin of 19.0% for YTD23, reflecting a 260 basis point improvement[16] - The company reported a normalized operating profit margin of 20.4% for YTD 2023, a decrease of 10 basis points year-over-year[17] - The company reported a normalized EBITDA of R$ 6,584.3 million in Q3 2023, with a margin of 32.4%, up 520 bps year-over-year[26] - The company reported a profit of R$10,114.3 million for YTD23, up from R$9,491.1 million in YTD22[40] Volume and Market Performance - Total volume in Brazil was nearly flat at -0.1%, with beer volume declining by 1.1% and non-alcoholic beverages (NAB) growing by 2.8%[2] - Zé Delivery achieved 4.7 million Monthly Active Users (MAU), a 9% increase compared to 3Q22, with Gross Merchandise Value (GMV) growing by 32% year-over-year[9] - The company experienced a volume recovery in Brazil NAB, driven by health and wellness brands and enhanced distribution through BEES[15] - Brazil Beer segment's net revenue for year-to-date 2023 was R$ 27,533.3 million, with a 9.9% organic growth[14] - The total volume sold in Q3 2023 was 31,425.0 thousand hectoliters, a slight decrease of 0.1% compared to Q3 2022[17] - The company achieved organic growth of 607.8 million liters in Brazil NAB for YTD23, representing a 2.6% increase[16] - In Latin America South (LAS), normalized EBITDA grew by 98.7% year-to-date, with net revenue increasing by 72.9% despite a volume decline of 6.2%[21] - In Argentina, net revenue increased by 73.3%, with net revenue per hectoliter rising by 91.4%, driven by revenue management initiatives[21] - In Paraguay, volumes grew by mid-single digits, with premium brands, particularly Bud 66, gaining market share[21] - In Chile, the company gained market share, with above core brands led by Budweiser and Stella[21] - In Bolivia, Paceña continued to grow volumes, particularly in 269ml cans and 710ml returnable glass bottles[21] Cost and Margin Analysis - In Q3 2023, net revenue per hectoliter was R$ 399.8, reflecting a 6.4% organic growth, while Cash COGS per hectoliter was R$ (176.0), indicating a -1.9% organic decline[14] - The gross profit margin for Q3 2023 was 46.4%, a 340 basis points increase compared to the previous year[14] - Gross profit margin decreased by 90 basis points to 40.9% in 3Q23[16] - The gross profit margin increased to 48.4% in Q3 2023, up 270 basis points from the previous year[17] - The gross profit margin improved to 49.7% in Q3 2023, up from 48.3% in Q3 2022[45] - The percentage of total COGS increased to 46.1% in YTD23 from 44.0% in YTD22, indicating rising costs[47] Strategic Initiatives and Future Outlook - The company is focused on sustainability, with 5,100 partnering bars and restaurants now using photovoltaic electricity, contributing to zero carbon emissions[11] - The fourth quarter is expected to show continued growth and profitability, with consolidated Normalized EBITDA organic performance anticipated to exceed the 17.1% growth achieved in 2022[9] - The company anticipates continued growth in the Brazilian market, driven by new product launches and market expansion strategies[45] - Future outlook includes a focus on organic growth strategies and potential market expansion initiatives[22] - The company is actively pursuing new product development and technological advancements to enhance its market position[24] - The company aims to continue expanding its market presence and investing in new product development to drive future growth[47] Financial Position and Debt - The company reported a net debt of R$ 2,836.2 million as of September 30, 2023, with a total consolidated debt of R$ 3,717.7 million[31] - The effective tax rate for Q3 2023 was 1.1%, with an income tax and social contribution expense of R$ (44.7) million[32] - The company reported a net increase in cash and cash equivalents of R$5,310.8 million for Q3 2023, compared to R$3,534.0 million in Q3 2022, marking a growth of 50.4%[53] - Cash flow used in investing activities for YTD 2023 was R$3,509.2 million, a significant increase from R$1,648.9 million in YTD 2022[53] - The company paid dividends and interest on shareholders' equity amounting to R$125.4 million in Q3 2023, up from R$117.6 million in Q3 2022, reflecting a growth of 6.6%[53] Shareholder Information - The company’s shareholding structure shows Anheuser-Busch InBev holding 61.8% of shares as of September 30, 2023[34] - The number of basic shares outstanding remained stable at approximately 15,745.5 million in Q3 2023 compared to 15,741.6 million in Q3 2022[51]