Ambev(US:ABEV)2022-05-17 16:00Financial Performance - Ambev reported net sales of R$18,439,152 for Q1 2022, an increase of 10.8% compared to R$16,639,761 in Q1 2021[9]. - Gross profit for the quarter was R$9,024,666, up from R$8,694,431 in the same period last year, reflecting a gross margin improvement[9]. - Net income for Q1 2022 was R$3,528,838, representing a 29.2% increase from R$2,733,311 in Q1 2021[9]. - Total comprehensive income for the period was BRL 7,858,946 thousand, compared to BRL 7,565,774 thousand in 2021, indicating a year-over-year increase of about 3.9%[12]. - EBITDA for the consolidated group was R$5,493,290 for the three-month period ended March 31, 2022, compared to R$5,243,238 in the same period of 2021, reflecting an increase of 4.8%[101]. - The net income for the consolidated group was R$3,528,838 for the three-month period ended March 31, 2022, up from R$2,733,311 in the same period of 2021, indicating a growth of 29.2%[101]. Cash and Liquidity - The company’s cash and cash equivalents decreased to R$12,887,922 as of March 31, 2022, down from R$16,627,698 at the end of 2021[7]. - Cash generated from operations decreased to BRL 2,219,562 thousand in 2022 from BRL 4,178,053 thousand in 2021, a decline of about 47.0%[15]. - The company experienced a decrease in cash and cash equivalents at the end of the year to BRL 12,796,459 thousand from BRL 17,286,068 thousand in 2021, a decline of approximately 26.0%[15]. - The company has adopted bilateral "trigger" clauses for significant derivative transactions to minimize credit risk, requiring settlement when fair value exceeds 10%-15% of notional value[160]. - Ambev's liquidity risk management includes cash flow from operating activities, cash and cash equivalents, and access to loan facilities to finance capital expenditures and dividend payments[164]. Assets and Liabilities - Total assets decreased to R$127,399,920 as of March 31, 2022, compared to R$138,602,483 at the end of 2021[8]. - Total liabilities decreased to R$47,203,479 as of March 31, 2022, down from R$54,584,866 at the end of 2021[8]. - The company’s equity attributable to equity holders was R$78,923,098 as of March 31, 2022, compared to R$82,643,031 at the end of 2021[8]. - The total amount of tax losses carried forward was R$3,488,396 as of March 31, 2022, down from R$4,122,454 in December 31, 2021[54]. - Total financial liabilities as of March 31, 2022, were R$30,442,002, compared to R$35,037,806 at the end of 2021[172][173]. Operational Costs - Ambev's distribution expenses rose to R$2,529,019 in Q1 2022, compared to R$2,129,593 in Q1 2021, indicating increased operational costs[9]. - The company reported a net finance result of R$596,713 in Q1 2022, an improvement from a net finance loss of R$1,064,300 in Q1 2021[9]. - The company reported net finance costs of R$1,623,093, compared to R$1,444,395 in the previous year, indicating an increase of 12.4%[109]. Impact of COVID-19 - The company noted that the COVID-19 pandemic has significantly impacted sales, particularly in countries with lower income levels and less mature beer markets, affecting overall demand and distribution[20]. - In the first quarter, operations in Brazil were impacted by the COVID-19 variant Omicron, leading to a decline in sales, but a gradual increase in volumes was observed later, particularly in March 2022 compared to the same period in 2021[22]. - The company incurred exceptional expenses of R$10,668 thousand due to protective actions for staff and community donations as of March 31, 2022[24]. - Exceptional items related to COVID-19 impacts were R$10,668, down from R$31,051 in the previous year, showing a decrease of 65.6%[108]. Shareholder Equity and Dividends - The company paid dividends totaling BRL 22,006 thousand in 2022, compared to BRL 1,241,110 thousand in 2021, indicating a significant reduction in dividend payouts[15]. - The company is required to distribute a minimum mandatory dividend of at least 40% of its net income, adjusted according to applicable law[90]. - The capital stock increased to R$58,130,517 as of March 31, 2022, from R$57,973,874 a year earlier, marking an increase of approximately 0.3%[76]. Risk Management - The company is exposed to various risks including foreign currency, interest rate, and commodity price risks, and has established a Financial Risk Management Policy to mitigate these risks[136]. - AMBEV S.A. utilized derivative financial instruments to manage risks, resulting in a finance loss of BRL 632,260 thousand for the period ended March 31, 2022[145]. - The company has a significant foreign currency risk exposure, particularly in US Dollars (BRL 17,080,116 thousand) and Commodities (BRL 2,781,277 thousand)[145]. - The interest rate risk for Brazilian Reais was 7.5%, with a risk amount of BRL 2,301,351 thousand as of March 31, 2022[150]. Inventory and Impairment - Inventory increased to R$11,426,297 thousand as of March 31, 2022, compared to R$11,000,346 thousand at the end of 2021[44]. - The company reported a significant increase in impairment losses on receivables and inventory, totaling BRL 72,104 thousand in 2022 compared to BRL 27,251 thousand in 2021, marking a rise of approximately 164.5%[15]. - The company reported a decrease in impairment losses on inventory to R$119,209 thousand as of March 31, 2022, from R$157,774 thousand at the end of 2021[45]. Taxation - The effective tax rate for the period was 1.03%, significantly lower than 6.25% in the previous year, primarily due to government subsidies for sales taxes[114]. - Tax incentives contributed R$507,715 to income for the period ended March 31, 2022, compared to R$441,667 in the same period of 2021, marking an increase of 14.9%[88]. - The company recognized recoverable tax credits totaling R$7.6 billion from 2018 to 2022, with R$4.45 billion related to the period from 2009 to 2015[193].