Ambev(ABEV) - 2025 Q2 - Earnings Call Transcript

Financial Performance - The company reported a high single-digit organic EBITDA increase with a margin expansion of 110 basis points, despite soft interest volumes in several markets due to adverse weather conditions [6][9] - EBITDA grew double digits with a margin expansion of 160 basis points, and EPS increased by 6.5% [7][9] - Cash flow from operating activities grew 4%, reaching BRL3 billion, despite a 9.2% decline year-over-year due to volume dynamics [27][28] Business Unit Performance - In Brazil, beer volumes declined by 9%, primarily due to unfavorable weather, with June accounting for over 60% of the volume impact [15][16] - Premium and super premium brands in Brazil grew mid-teens, gaining market share, while core brands sustained almost 30% of volumes [16][18] - In Argentina, beer volumes returned to growth after seven quarters, with the premium segment growing double digits [19] Market Dynamics - The company faced a mid-single-digit industry decline attributed to adverse weather, with 70% of the decline explained by weather conditions [36][37] - The core segment's decline was in line with low teens due to higher sensitivity to industry performance and revenue management decisions [40] - In Canada, volumes grew by 0.8%, driven by a growing Ontario industry and strong performance in the non-alcoholic beer segment [20] Strategic Direction - The company emphasized a disciplined focus on cost efficiency, which offset non-commodity cost inflation, resulting in significant savings [14] - The growth strategy includes leading and growing the category, digitizing and monetizing the ecosystem, and optimizing business operations [8][10] - The company is confident in its ability to navigate cost pressures and maintain brand equity, with a focus on premiumization and digital engagement [29][42] Management Commentary - Management expressed confidence in the company's positioning for the second half of the year, citing improved weather conditions and easing consumer price relativity [42][43] - The company remains focused on sustainable value creation through disciplined capital allocation and operational efficiency [28][29] - Management highlighted improvements in employee engagement and brand equity, reinforcing confidence in future performance [29][99] Other Important Information - The Board of Directors approved an intermediary dividend payout of BRL2 billion, totaling BRL6 billion declared this year [7][8] - The company reported a significant increase in marketplace GMV, driven by partnerships and improved customer engagement [10][66] Q&A Session Summary Question: Volume performance in Brazil and future outlook - Management noted that the mid-single-digit industry decline was largely due to adverse weather, with no structural change in consumer demand expected [36][37] - Confidence in the second half is based on improved weather conditions and initial signs of easing consumer price relativity [42] Question: Cost management initiatives - Management emphasized ongoing cost optimization efforts, including SKU rationalization and improved distribution expenses [44][45] Question: Dynamics between on-trade and off-trade channels - Management indicated that revenue management initiatives were implemented across all segments, with a focus on maintaining pricing aligned with inflation [56][57] Question: Digital marketplace performance - The digital marketplace saw a 90% growth in GMV, driven by partnerships and increased customer engagement [65][66] Question: Brand equity and Skol strategy - Management highlighted improvements in brand power metrics and ongoing adjustments to the Skol brand strategy [99][100]