ABEV - Earnings call transcript Q2 2022

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Operator

Good morning, and thank you for waiting. We would like to welcome everyone to Ambev's Second Quarter 2022 Results Conference Call. Today with us, we have Mr. Jean Jereissati, CEO for Ambev; and Mr. Lucas Lira, CFO and Investor Relations Officer.

slide as available webcast well this a our downloading link reminder, call. ri.ambev.com.br, website, as a presentation for is on of As through the recorded that like listen-only a the event inform would during participants you presentation. We is be to mode being and company's in all will this will are session. a Ambev's remarks be After completed, there question-and-answer that further instructions time, will At be given. me Harbor are being Act the Safe of [Operator Securities statements of Instructions] made forward-looking XXXX. Before mention that proceeding, Reform the let Litigation under

assumptions and They and beliefs Ambev's may future. the differ also figures changes and in on on the or which first XXXX could refer not forward-looking of during of refers based are activities. that available affect normal Investors not the as or discussed usual, and stated, part future expressed in future changes in exceptional company. Ambev's statements that, remind both on general circumstances and and be those percentage will that normalized percentage and quarter the to from statements. occur to occur to assumptions to before currently to do are depend involve like such results. otherwise comparison measures expenses Normalized performance of operating information and income relate organic industry with we nature; items results other that call either the everyone are regularly could today's cause Forward-looking unless management results factors also uncertainties therefore understand may conditions, Ambev events that materially because to they should economic conditions, risks, as would I

earnings consolidated in measures, EBIT, the As a EBITDA EPS, normalized profits, the fully and reported figures company discloses on non-GAAP the basis release. are

the you begin I conference for Mr. Jean conference. Ambev. to Jereissati, CEO your may over will Mr. Jereissati, turn Now,

Jean Jereissati

for good everyone. quarter you call the Good for joining earnings morning and Thank second XXXX. our afternoon, of

of out well-positioned started last came that we delivered. what mentioned and that I QX, call, I encouraged we our XXXX with During

And QX why. evidence see I forward. even is here results, going confident As more review I to be

This In takes markets, quarter again able on-premises continues moment. services consumption we back. glimpse to this as in have patterns our with well of and once post-COVID underway world. Ambev a been led And time than of million reaching we reopening place, X% levels. grew of businesses in XX meet provided almost a the the which XX hectoliters, in to coming XX% volumes, revenue than net million more the a is growth quarter. is XX%. hectoliters This first reached second higher It several XXXX

organic addition, of to cash over grew and compared flow In EBITDA XX% the last period same year.

expansion about another to let's to In QX X.X this the we grew we the the X.X% Brazil. the in So, that leading quarter quarter overall X.X journey the grew industry and hectoliters, grew year clearly we comeback and versus market versus million gained hectoliters. estimate in last year, we estimate both witnessed in share volumes topline almost X.X% out-of-home talk half. by To-date, and first and sequentially as entrée Beer, industry Volumes million the of consumer by more we occasions, value. solid Brazil, In performance. leading

more tray Chopp more of Brahma, their which and led in relevant Original terms XX% premium than segments, own In by grew are channel.

quarter pre-pandemic its In second levels. buyers with XX% quarter, volume the the fact, this Brahma achieved Chopp more in highest than

revenue performance we about this by especially out-of-home the another And finally, XX%, healthy great with Brazil invest volumes, core grew NABs continue grew by revenue delivered its about and low-teens, developing our Spaten. driven of Malte occasions BEES. driven Duplo to growing Pepsi behind XX%, by brands, estimate plus which hectoliter EBITDA doubled net grew brands Volumes great market XX this we and volume In more success Pepsi corporate share brands, grew grew in XX% with Talking XX%. in initiatives, Brazil, package again quarter. organically, driven Black, in supported expanding margins beer hectoliter grew and momentum, increasing While the the our than revenue weight per single-serve per sustained Net by our margins Brahma XX.X% CSD, XX%, XX%, brand. within EBITDA packaging mix versus year as premium we by by XX%, Pepsi mix management We this organically grew gained last XXX quarter. almost revenue bps. Net expanding bps. quarter. its

platforms, our of revenues over through coming XX% are technology our BEES. Regarding

orders, in a on clients. announced a products month vast partnership Zé we a by GMV model, Grupo offer Delivery better for last platform mostly delivery. the million rise occasions. of below Açúcar, X% XX users will like the marketplace, compared X% delivering by the we active an million impacted with the June, level and grew kept just X year, fulfilled previous assortment our a in year, out-of-home On even via XP our who of and range with Pão BRS, de service

We features to continue behind invest our bank experience and TPV by customers. consumers. BEES a quarter-over-quarter user XX% almost reaches delivering to now better more app XXX,XXX grew to and And adding our about

per Beer overall about in reopening in that core Premium is place, among volumes brands. environment continued a the In to Turning X.X%, net with gained gain Talking and all CAC. quarter. on the volumes our XX%. in consumption, Chile have supply Panama, grew in to reopening. We impact grew weight of glass beer, estimate decline short-term Talking by coupled declined a flattish we operations. by Beyond to remained, tougher value still the by our the took the in about and by despite quarter. revenue net industry XX% a LAS, led this LAS, Argentina, competitive Canada, Paraguay, remain share estimate contributed that revenue In In which constraints overall benefited almost volumes we overall Core market led sluggish. brands. hectoliter cautious despite industry X% and rising to by and international In Bolivia, about flattish Plus inflation CAC,

to like building. brand would I about talk Now

only we much explained pillars; the awarded record. but seven also we them way we the starting home and first-ever to meaningful its is of were Day, on based in this three awarded in mind year, the XX. Ambev creative in in evolved continued It way. helps company in engage Festival in beverages consumers' Investor brand mind, how was in Budweiser of most the Beyond in proud strongly total, Guarana Brahma of that is Golden we awarded quarter have prizes Brazilian categories, all to evolution The brand most being capture year, our mouth framework Creativity the with no were the media effort going with Cannes beer, our a few attention This is longer with heart. with for mind, this in category not campaign. Last world Talking of, our Lions our framework, creative and about And ads Brahma of believe an building. and in Brahma which and growth the brands During and Beer. years unnoticed. all this brought seven haircut absolute results our social awarded in KPIs. health was Lion be last is a festival best in Lions Foamy

to continue as launching mouth. keep Brazilian Now to moving we recent innovations products Key grow all tastes. delight to

to Our Duplo creamier brewed malte is special a limited Brahma Malte edition, with Malte Black, most which a recent darker project or types is Brahma and Escura, beer. of create two Duplo even

study listed We evaluated Technology by awards X,XXX the innovation to MIT continue the were innovative the innovations. companies in that country. our June, Brazil In a XX Review, collect for we in one most than capabilities more of in companies

our pillar, to the going third heart. Finally,

about to of platform connecting the Brazil, country. Northeast helped presented years our cheering awaken some be celebrations the where traditional the and created passion urban our festivities a to of the fantastic of it’s and relevant for the NBA season in Brazil. through together. and XX,XXX Urbeck’s more Here gap XXXX, than being festival. areas the different continue Brahma consumers' playoffs lives to music main the two watch Beck’s circuit the bring the largest had in due House all centers brands COVID-XX, that to a and helped the opportunity space most in to On people one urban points. Budweiser back their of After in

the keep mind, and international a will some Brazil an our than performance deliver to to stronger and quarter the both term in in headwinds heart growth we loved tough our and and help long than in a by HX terms of Beer innovative despite continued we and in To volatility even focusing relevant, will we bottom make HX, more mouth volumes we in inflationary great stronger had our third organic the are line brands our sure conclude, We consistently operations. will make It in and offsetting work in expected on accelerated and even facing pressures. Brazil more comp which top consumers, was QX trajectory.

We not per terms any of sale track making to marketplace the XX% Moreover, cash guidance of growth changes to our we remain for COGS year excluding hectoliter the our Beer XX% relating growth, on to and ambitions a organic back and return over non-Ambev Brazil and are between products. in is we in invested growth organic consolidated to main EBITDA ahead XXXX for non-Ambev to to the capital. have our growth improve that bottom the That of had get line year. Brazil

will Lucas. results the entire transforming you time. team once for the Lastly, amazing company now and special mindset back for out your and again And I delivering the the shout I marketing Cannes. like to to thank for would at a in performance to over Congratulations team. the Thank hand ownership

Lucas Lira

everyone. you, Thank hello, and Jean,

line highlight. change, performance same key. would quarter what should net in terms be financial nearly QX the in top growth consistent with not with overall, Brazil in XX% the delivered what remains revenue What change first, XXXX. of once being should main the Our was again We fairly and growth first

grew than hectoliter grew XX% capital, a Cash improving value the progress The level, environment. grew to in first, be input return on remains Beer quarter. for almost nearly a would XX% creation in products. per higher adapt game per And hectoliter around drivers. sticking our change, we what on continues continue to we performance inflationary hectoliter name pressure Second, marketplace volumes on revenue XXXX. consolidated the it terms COGS in excluding to net at and our cost as volumes here third, revenue And focus while Brazil, driven invested non-Ambev per the almost would net XX%, grew X% building Net of more point. revenue by of

increase Second, was mix. commodity partially cost barley, Beer headwinds offset by mostly the would was inflation and rather which cash aluminum driven inflation mostly explained Brazil by RGB hectoliter in COGS better Commodity per more come from by than FX.

behind and investment be $X.X Cash of billion should grew in continued accrual but quarter. one-offs anticipated. improve. a just due a reason this in distribution over inclusion admin tax operating last PIS and tax results federal of was expenses the in and marketing ICMS about our originally growing was compensation in the And around little the mainly taxes, We year a almost in and EBITDA, diesel in sales XX% gain growth QX recognized and which innovation, state with brands declared million our XX%, of tax we rising that once credits, thanks XXX for to again. a COFINS factor, impacted about it than also given our SG&A Brazil which in XXX XX%, credit income to variable factor quarter prices Third, SG&A other financial lower of million basis tax the This different financial relates taxable growing and positively unconstitutional. approximately results. in the growing the to rate would effective fourth, X%, And quarter

assessment as in have advisers, and the we prior additional during matter. legal mentioned pending the of tax PIS viability in that we quarter, years. the concluded calls, together counsel well is litigation both and this quantification I the As the COFINS portion this of with over there for still And credits external as overpaid

organic our as results financial technically accounting from credits normalized for refer for our standpoint, treating of a further but them tax are an we these reminder, of to part our performance, a purposes Please disregard scope details. change. statements them calculating As

and EBITDA is Now, the growth in than XXXX. out growth than the than Brazil's declines organic better XX.X% the given CAC recovery stronger quarter, organic expected, this track on our delivered more are in year we in offsetting year-to-date. well to turning to is we XXXX performance be which deliver in a Canada

quarter's recovering performance in last, growth year-to-date, managed revenue from is true was delivered And last this COVID. XX% ahead for slightly again XXXX, and deliver growth finally Argentina quarter-after-quarter, this EBITDA in we've and mainly by Bolivia, into putting above inflation, of HX, local As the delivering countries is growth QX while driven EBITDA QX. perspective, which other since net to

margins So managed is we profitability growth headwinds Brazil growth QX, beer Brazil, news is in the to while. good all the that expanded lagging deliver the XX a and been basis EBITDA And which in EBITDA there, of consistency, gross expanded margin had while faced. and despite by on the NAB in start. by for bps we terms still doubt, but finally a points. there Brazil on do No work side it's to is margin XXX

also year-after-year. we've Speaking invested mentioned consistently And we're here, made so of looked I've of we've improve as at terms profitability capital prior working with profitability, this far also in progress the to year. on in calls, returns happy

and business financial side, to allocation invested return our across optimize ways capital cost we discipline second, well resource as first, to markets; improved digitize look improved and as As and on the at to businesses monetize expense as we assets. continue our our on look through and

scale-up such as more so NOPAT helping technology the us early still the days growth, going only are forward. Here, platforms, BEES It's relatively see NOPAT these asset of margin, upside Zé definitely also turnover. not for but platforms we and improve Delivery

effective Net and hedges offset and Now represents from issue quarter, by X% FX Normalized Cash million. our lower about EBITDA increase net by Brazil cash continue turn partially billion little quarter our some with impacted in of tax an carry Argentina, higher in about given and of costs the performance expenses increase versus the XXXX were flow grew let's growth rate, around forward. finance operating the which $X.X QX totaled expenses will flow a in over to XX%. to close profit activities EBITDA, on BRLXXX in words below be mainly commodity associated which and the going finance ESG. with and a should continued an I our financial

from to due Our of interest under higher payables resulting offset grew expense Brazilian credits fully IFRS tax in the it quarter. by adjustments mainly but XX, fair recorded the income value was we interest

some Before highlight I wrap briefly want progress to terms in sustainability our important milestones. up, I of

date program side, We at a social transformation volunteer VOA recently plan our that people with in an dialogue. tons Falcões, of social more on over per Brazilian the by the of Parana. deliver neutral our State and reduction four Falcons ESG within mentor and us engage plants favelas State of On the in announced Together, they Brazil; environmental an side, in University. carbon we Amazonas; are and the Minas year of three initiative Curitiba the Gerais; you of to to of we carbon-neutral NGO the of leaders Gerando in social State Arosuco development year that Juatuba QX, graduating to Aromas an Brazilian joined the represent this can gases have during in we emission intend hold hope social additional in X,XXX greenhouse operations end. And NGOs

messages. up, to few final So wrap a

than a gives we stronger particularly confidence in HX, HX expected, more going which we us into First, Brazil. delivered

remains in Second, remain transformation Panama since progress results like short-term volatility focused our high And on remain a countries third, delivering particularly continuous consistent challenges we Argentina, Ambev’s we and on and and journey. improvement Chile. in as our guard reality,

to turn me it let we back so can operator go to Q&A. the Now

Operator

from will Instructions] Suisse. session. Recchia begin now question we Credit [Operator gentlemen, Ladies The Marcella and the first comes question-and-answer of

Marcella Recchia

congrats have Hi, results. taking questions. questions two you Lucas. I my Hi, Thank Jean. for and on

Ambev price quarter. participants, second the we First, in on increase implemented heard Based on off-cycle price. an industry that conversations with the

increase or and of based at in that, the to we quarter can which third price before how usual [indiscernible] by second cost, So to much? that pack that could hard like the top push and order you could so of channel price discounts volumes? to question. we come, expect -- increase or on On answer me reduce Let asking and just if the would confirm

Jean Jereissati

you your Thank Marcella. Okay, question. much very for

unchanged, know, per medium do not to in brand inflation, right favorable prioritizing volumes benefit pricing with we really in the work and elasticity back channel you hectoliter, revenue finding but the on focusing a between sustainable really mix. always on long-term strategy lag As net are

– but have is to performance we environment elasticities Since a we change. on income, strategy flexible way, the XXXX, the and while this been So moving not in improving growing inflation, on disposable does management. pricing continue pretty monitor working volumes, much forward to make revenue watching really decisions

the an get was gain small effect was it that was more during a in off-trade it and or was down -- surprised then in mix, So the and in some May, that, getting regions reopening price granular ml XXX that took, both that coming revenue was and QX the Southeast. the regions Northeast having of RGB right? tactical really winter It we see so we of on the the in actions usually, the some But traction. seen on per on there mix around COVID we on by weight, regional bars more a going mix sequentially, said [indiscernible] really quarter the say, packs did channel maybe Jan, X.X%, net in one. we So the were this PET bottles us, increase is it and hectoliter this

hectoliter on I decline us to I pricing mitigate sensitive So, that QX forward. the can't this to really on moving usually Page revenue decisions comment really somehow this helped to we -- net can't comment. per two, QX. have competitors

Marcella Recchia

segment, is, much did was in segment second how helpful. the grew very about plus quarter. the quickly the And only you question volumes mention very Perfect. not That's the which core

segment the Thank of on can how you. the performed hear be give us you So, been quarter? from also, and the has And nice in [indiscernible]? color rollout if acceptance how it second some you would to

Lucas Lira

Okay.

a good So question. that's

to pandemic step So a in-home about dynamics study the that saw segment. talk see arrived, since was traditional the focused you the ml it in homes. in-home inside designed we designed in previous during that we – bottles up We right? actions a slowed. [indiscernible]. the we this doing we give to we that, a Duplo get Brahma talk fulfill to the core the deep went ourselves that, is get QX was the on we So segment on really and brand the right? and the of a Malte, What see deep then lot plus expanded we me opening, delivery right developed years Let on -- about trade Marcella two to changed XXX occasion

back was all hectoliters it strategy very that a so out-of-home really But on change volumes step there to in everything really are really our see occasion. happy XX combine we actions, really was that these then of residual lot really our something our -- have to million And out-of-home that the we lot home that travel the this but of around occasion a of residual and strength company. the So shining changed a things, is it that's it. we really QX, what seen consumers it shining led the that in-home with bars. in that It's social was is

for somehow right? In So, corporate came were because unplugged the back -- XXX bottles high -- it market bottles coming kind they they that growing XXX we with initiatives. So ml and strategy, of they very bottle. are back, in -- really that with so continues and Brahma Bohemia, liter were back. core seen strong waiting on more see be lot end they the we Original, ml of We've that, a and to suffered come they

but and you on combined Malte focusing Duplo brands, we on more we ml if XXX was of If growing the in-home double-digits And the combination in designed Brahma Malte Brahma segment. Bohemia on two see with We the more occasion. Spaten, bottles, the it are quarter, Duplo really this Spaten negative volumes. are get these that two with

Marcella Recchia

again. Thank much congrats Excellent. so you and

Operator

Bank from America. question Simonato comes next Isabella of with The

Isabella Simonato

Jean, morning good you. everyone. Thank Good Lucas. morning

main a on looks this of look a you much all, discussion the have on volume right, volume, to below right, of mentioned, year, is, we grew -- pretty while It's based the average when when first segments, going follow-up, Just remarks, Brazil. questions at double-digits in printed interesting two follow-up segments. the those the all right, the they're

mentioned think per surprise. you the and positive is segment average a helpful. down? second just that been bit about the it when So, we first the a think color question be the little would or little give And half, if brings performance what right a has more guys exactly over bit I you

tough you case, positive However, seeing second you is change guidance, if in I is bit in if don't if And challenging, in or what right? a what's guys see challenging you half. surprise comp are -- you how or little given So, that's Thank be room the color get more guys a you. there didn't just It think would market, for know or on more right, those the to you international in Brazil? going Argentina, the more a second half.

Jean Jereissati

volume-wise, Let one. Isabella, we about. excited me one so get very get But then the first are the Lucas and second

volume volume great the in X% look sometimes, because moving. to But -- the quarter-by-quarter, it's quarter. is misleading it's a So, consumer end in

volumes the we've brands brands that. from seen XXs in back I high the really with like [ph] this end we really mentioned, Original So landed Brahma then -- doing as well was So, XX% okay? in and in -- a you Skol, above look consistently our if period, one more in we above structural XXXX, to XXXX, to and than in high-end and leading another. It are occasion

[indiscernible] went The Sparking, around Somehow, double-digits. that really unplugged, [indiscernible] low brands plus what [indiscernible]. regional the to brands is that was it So I have like that we value teens brands that mentioned with okay? we like some brand two, midstream down, that really they are

see -- somehow the then now brands in – same and the pace And really took So core plus of but they were taking core and portfolio. of end that the overall. high brand heat ahead we

to the craft very brands, specialty well very Our So okay? doing specialty. doing are going are well, they

he a more that We was we Lucas, something that January And that is the excited. what the this it my guarantee QX, a we were believe look at but But Q. place top I QX. So and this we strong to in to we somehow, is call. in words one-off are Talking put will that -- Omicron be over Then HX. statement we markets. when strange not hand it's on guidance, expecting be with as that like in that will we when HX, to HX if Omicron compare hit we -- we -- I mentioned are are was confident mention, right Then better that HX better in bottom we about when on QX, just that line many we what had mentioned initial and we will than we had here with thing. it's just the in line one

So we the rounded you if as up. are put look I somehow, kind numbers, you at confident. will to Lucas of But get

Lucas Lira

year related the for products, was Thanks The Starting with Isabella. cash products. that we excluding for marketplace Brazil Ambev hectoliter COGS was the in Hi, in non- Ambev excluding guidance. trending the our expectations beer, for non-marketplace the stands gave, XX.X%. results in when and announced cash guidance marketplace we QX full per right, beer, year products, Brazil guidance year. Jean. we the guidance you, to hectoliter at question. year-to-date, that gave is And announced Thank products, Sure. And that non- cost Ambev that the the right, per

our we level, just what when our on consolidated ambition look the of ambitions our to of good. remember we right, of ambition on add of And ability bottom-line HX delivered that given Brazil that the Jean to answer is I shared deliver which of in when XXXX. deliver okay, are year, then be view of coming a our growing in XX% right, hedgeable, growing the at XX.X% below and right? XXX% official see our that why in When got of we the to this merit ahead in our believed, again, I you question the look managed significant was a was first overall would at our was difference around our guidance. our I terms right, this XX%. our our EBITDA that in costs, We mentioned, QX in XX%, step-up which more there range, XX%, ability back come the on results in think is that top not is performance, at HX, as organically to deliver what of we for On keeping ahead So total our you for year, HX if believe, the of one we on confident to we prior that, a made and is ambition. itself, if But right, XX% for feasible. to of calls, in still on half, performance, growth out And a outlook enormous an tailwind to Ambev growth which XX.X%

Brazil, performance continues of right, at than Cochin, Bolivia, last stronger So, and Argentina. that do good to if and Chile, mindful digits to XX% we point a the HX expected, Canada for grew within better Paraguay, QX, countries job think Uruguay, manage in we they Just we double another and other Argentina, okay? and in outside of But last to for QX, in just the you in data have. deliver challenges instance,

we're be better continuing to we okay? can in going manage have So, to work we pursue in deliver do still there to still potential momentum and in in and Canada again, But CAC that Cochin, offsetting continuing if results a Canada. in in HX, HX, in to last helpful have headwinds Brazil

Isabella Simonato

terms half better that to on topline double half Jean nominal No, said and is super clear. is one, could it second Jean minor one be bottom-line confirmation. When growth, that? just just than check or

Jean Jereissati

growth. Inorganic

Isabella Simonato

growth. Inorganic

Thank Perfect. you. Okay.

Operator

question next JPMorgan. The Ferreira from Lucas with comes

Lucas Ferreira

everybody. Thanks for questions. Hi,

regarding The SG&A. first one is

some half it's events have If year. second World Cup, to bottles, the important ahead, can the how potentially you as be about provisioning again, for you strong SG&A, such discussing to of think going a

to kind this heavy of There was SG&A first half. how of So, about that? think already

say And you help to sort or the second performing a you deliver Are expected, because, that those selling similar expected? to guys So, expectations foreign ended you Lucas, up positions So, trends you as do into also question, that Are better bit year, some cannot second about to growing that unhedged prices than unhedged now guys given should this much the guess, a at had come And probably we issues last the having sort you. how I maybe commodity you're well? should of company with half with you think an about? talking you cost position alleviated or lower yet? somewhat right? than see beer see the year? this would Thank more of

Jean Jereissati

Lucas, thanks for the Sure. question.

me on been for done, with now. some that's second hedgeable for quite So, start everything the has hedges, done right Let time has been the and okay? one XXXX

coming event deliver us, for a directionally more investment mentioned, prepare lower and to really the SG&A sales XXXX. cost. serve the in try Lucas, XXXX, recall, in I that's as expected. and And hedging for lower on out QX answer, compared growth the anticipated guidance compensation, right, inflationary and environments for lower led the really one apply year. like done our you bonus It's not higher fact right? to guidance first But year-over-year that's updating side, the event The of in sales the proportion, the So point than meet much we a And a year year up to will the base. our issue but World right? XXXX of double a Cup, and And that and okay, then admin so one whammy portion main such living you overall with of this created to been SG&A was right, at rate far. opportunity right? my the has lower unhedged effect, accrual year-over-year to HX, have answer higher help question enough really the is our that in to our bonus versus segue issue according, portfolio that As you're is HX. we there prior XXXX of was around year, higher our during a and that that our are is So moment, into not is do not budget, clients only that looking marketing will, of on So issue case year, growing XXXX that right, on the as should impact making we no also brand on recovery ours. platforms, reasons think we're stronger That's because second changes not the in serve side on will we of for The the an bonus cost compromise, there right, again, is Obviously, – the the not to SG&A. unhedgeable There the on more for technology some how our hedging portion marketing right per better right, markets for that the issue was that is any And se, we precisely we're around So side of we because was beer, consumers remains better, not XX% again, What leverage So, growth gave SG&A a as XX% through to to factors year, a expenses. for in depend good and the that This important increase I year, that that's last And QX will side right? of then and half a HX last the unhedgeable better okay? Brazil accruals, year-over-year your we was costs. growth. an right, call of applies risk the of beer. of expenses to, why, right? an for variable if QX admin the great the versus SG&A XXXX not to in cost accrue an we was accruals. Brazil to issue

but events happens on a mean So was factor in of forward. in factor. of I out also I yes, it distribution QX really is coming in calendarization the that expenses, a watch diesel because we that's have to has And what right? not there this our diesel, different is the been year, terms only think than distribution, QX, a

in touch, discipline, and health we're invest see half-full develop right, possible that typical business, I it's that of to in able growth, growing terms funds on focused that addition sales being to And do news. year-to-date and financial marketing are net applying in check, think continue strict non-working of the the is our of right? are of side equation revenue side as sure of that release our That's in and is marketing to to which and always making I terms everything like going brands don't consumers that sales money glass our distribution feel, good going things to that, forward. sense the as that's below be think to that the we something more on we

Okay?

Lucas Ferreira

clear. super Perfect, you. Thank

Operator

with The next question comes Bortoluci Goldman from Sachs. Thiago

Thiago Bortoluci

and taking Jean questions. I Yes. good have for two. Lucas, Hi, the morning everyone. Thanks

be guidance. follow-up a parts might price on and commodity forma, an policy also cash understand from have kind our on of as moving you the here, are of one, lot of first needs we you part Obviously, but The there different pro hedging well. [indiscernible] a in of that average a

the that to the head incremental election is first this you of hear different also really just meet impact more volume first there just event on Thank a have see So of the to part as some that this you, and And should parts we from be you could from lot So opportunity? Thanks if you. of the Brazil, Cup see question. know that or I'm are one an prices a the guys. just an curious the questions. in might to right? and positive we from next commodity the lower months you quarter? now, bit the the outlook little beyond how are explain moving Those could you create over to typically, for quarter selection regarding believe decided and go early if do see opportunity for the quarter, you first into volume, XXXX, for for much you this or right? from hear Obviously, business second should just dealer try World very and the This is XX is

Lucas Lira

This Okay. Lucas. is Thanks, Thiago.

the the more Let Cup right? think one, to me in the the XXXX a about that, this for I terms to to aluminum of World commercial okay? preparations of talk take specifically, issue than exposure on is of over course, no a headwind to still give have of been a it's three the a still no do the end XXXX. years. longer through early two, good news so is first and XXXX the I'll over And hand of is news any longer last outlook But far aluminum good it right So hedging the We side, portion the to tailwind. issue. for it good the the specific Jean as is has that It's year.

It been as last currency side, headwind hedge is a the change. three the a a the On US well. also versus for two for years dollar has BRL the and tailwind

and end of far, our peso a FX but far continue than that's And barley are hedges be for should again, that lower the with headwind, so hedging levels glass to And of the good we saw year. of the what half still side headwind, a to year. empty we've the so seen through Argentinean a be so continuing hedge least hedges extent XXXX, to far do the a lot at so to on the in respect XXXX this that's to the news

and are through of the this FX So let's year. hedging see more things and kind commodities the where of to on year, Jean. you, a we Over XXXX how unfold far issue, of so the for aluminum, that's remainder

Jean Jereissati

Okay.

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it on in in prepared we World marketing are it's side. that will Brazilian to can do the year. year products will after the us the digital -- with time one to And first that residual We for big brands and have pandemic. believe is We and what summer this The the for things context we we we are XXXX. sure, together make structural that get help the this of question with Cup

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Thiago Bortoluci

interesting. you. Thank Very

Operator

Pactual. comes BTG question from Thiago Duarte, The next

Thiago Duarte

on three questions you. side. Hello, from Thank I – everybody. my Hello. have Lucas and

said first performance in clear positively one when a comment when the in could the of by surprised end on you the if to so source at strong was momentum first is you're clear The the bit guidance you it Brazil that. quarter. that it's that -- relative or point me biggest even exactly this Jean I think, of to But not surprise. is it provided Is the the what

it consumer or of high the cost of solution terms on-premise? it the terms on is are it how demand the side, is back going side in -- So which to guidance. strong just your [ph], consumers demand favorable is Is ecommerce the in

of company year, -- can a are on positive the the great. of had in you elaborate what quarter half saying biggest that the if you surprise if that for you So in the the a sources the more first second little be performance and bit could are would

the in quarter. The mentioned Jean, over in pricing second a business. second question small is increase the you price going Brazil back

growth volumes little mix, bit would you which on helpful guided growing was be are easily XX.X% for is could very guys very of working the at per company, considering not half, And in there some hectoliter that the question capital not a only excluding capital. as how It's now, you working would before. as in is QX, elaborate but also more the that entire look presume incremental the be a first when that the we positive this consumption, working gaining second capital particularly, third well. -- marketplace, I with you and beer on And revenue are is with If packaging common, RGB driving share.

consumption little Thank ahead So you well? nice that you if half; the would on could of that capital working be as bit elaborate driving a second what's

Jean Jereissati

the the get in I'll Lucas then question. the And third one, jump to and second okay. first

in QX, we knew, but -- us the us Brazil gain share. So so what continue surprises surprised we in it okay, was moving that market pieces to

fully the potential. really somehow, bars not we there gets this just about a -- and the was the consumer expectations, the when bars discussion it -- the and Okay? range sequentially, occasion it's okay? was gained So social when of top full that out-of-home of came on of market bars strength something the reopen So the share reopening, and the our

of it? that go size us. occasion the mathematics on-trade their at more to to not could on-trade we some the And in-home the was surprised down what's that the of And in time, and the go residual what's believe initiatives Or in-home strong. during So pandemic. this be was it that or volumes point the created for reopen

residual the about out-of-home strength So we with you the granular in of management, in-home the know it this volumes, that revenue are it very revenue And then that of surprised of management. was And talking was now above the combination this the X.X% on terms us. math. of equation,

that really You liked that strategy general. it have we inclusive about maintaining what been elasticity know very that competitive was Brazilian we basket we this in is the in challenged and really beer quarter a are And have really the -- consumers. -- the of we

per like and brand ml the high in us down it May. helping the good going I value bottles as Okay, the the with And in carryover hectoliter was it good previous brands it, But the did, revenue about of XXX the net actually things year, to. end, was volumes. it mix tactical the we a part here mentioned, was big of

back combination the in our bottles number and see that QX. that this made So you coming brand of XXX mix ml

working capital, Lucas? So

Lucas Lira

Sure. the [ph]. Thanks Hi Charlie question. for

issue an of QX right? terms right, had the CapEx. was working I payments have also, like I last recall that say you of around side, conversation quarter, the And payment our higher there QX would the variable given a the okay? if think issue in in mean of payable of our payables our compensation, suppliers, calendarization the was to level on actually I capital, bigger

So in terms a HX in working CapEx So in effect gap of XXXX bigger capital created that right? right, of ended being QX, double was that QX. paid up in booked,

factor the In that's year-to-date. by and terms far of of biggest kind QX,

has I and credits year the not tax year it what when and here relates receivables. on faster last on an that outlier is tax the credits, immediately but This side, monetization unlike recognize, we than our the receivables more think to did last the we the monetize. year, was that recognized QX, impact

spend inventory of the effect. there more calendarization some payments this inventory different the CapEx building falling. was in a more In year inventories, year, of it's on calendarization terms side, big no And other and QX terms are just also then than again, our change in QX payables of last than no a of major but in when building, major change

because to I a bonus, from to better capital the a view, CapEx, the you working tax these yearly calendarization like like to related So at on view have, events it's will credit. think time of specific quarterly like look on more time, swings

Thiago Duarte

so you Thank clear. That's much.

Operator

Alanis next Santander. comes Alan The question from with

Alan Alanis

very beer. on with everyone. I soft been the and market you for have and on taking I gaining the we've Congrats Hi understand Thanks drink between mean, much dynamics do share to the beer. [indiscernible] in results my competitive has question. connection

seeing a separation there in right bit see me also Heineken the I Coca-Cola are you're of doing market a congratulations, And I surprise that gaining that forward? with after in are Coca-Cola a of order to of a share – and Company that among lot is you of that and you the are your soft gaining system. value taking of things in you think going this sales share. What's competitors, to [indiscernible] are differently from for and and value also be gaining in market share what advantage and the how what institutions lot doing market in think drink sustainable reasons

Jean Jereissati

a been It's while of a we the we somehow, reality, we've -- in are transforming the quarter, Thank now start for platform into right. I've you, ourselves of for this were really like that soft past drink and soft proud of beverage of company. very question. big more the performance In mentioning been was a Alan, drinks

Now platform. we a are

do but understand company my did a in areas structural terms the in in breaking people have of portfolio of team having silos teams. So, terms siloed past is marketing-as-a-service; I working huge the the have as the for this somehow, change marketing we a inside not that something the frontline whole

we of to future. focused the brands topline unlock we top did that, So, on big growth. prepare efforts on the really potential its a of of company drinks, our to change On soft

was are partnership for launch So, the of us into face The of just places is somehow, surprise Pepsi cities a product getting is stronger we than and that how ever. the launching. PepsiCo Black, it the the the

fun was partnership good so view of a And that sales of we Pepsi with this in arising where could SKUs had rep that and this a the number of somehow with in a strategic they -- offer. past somehow terms

So, we maybe on put estimate gaining market of three NAB the that things these fire we are combination share.

never as in really really allowing that that ocean share. whole much past. colas this we Pepsi accelerating the brand, And of a market things there would tackle and is reality is to do more gaining So, we do us

for So interested. avenue growth it's are important of really that us we

structural. think this is I So

Alan Alanis

Thank it. so deleveraging that you're Got move results. to -- pushing so scale the congrats you is total No, you more soft real more towards ono beverage drinks. and much your your again, power, and here are your

Operator

Carlos with The next from comes HSBC. Laboy question

Carlos Laboy

can Jean, and growing I everyone. winning afternoon speak it's can the landmark But awards really, thinking Good nice and your to to celebrate team that is was proof creative have you you that a it's brand you markers you point they're your that on that importance. working evidence rehabilitation any strategy Brahma or are on brand here. lasting core can happening. a and is case build incremental and expand renovation renovation other Maybe points proof the the strategy

Jean Jereissati

it a the for Yes, brand of family so in I as that I is Brazil mention when long reopening think appearing with Chopp the beer time reference about Brahma fire a you Laboy. that of Thank Okay. don't question, really could like. one really on bars the talk is we Brahma as

using middle the Brahma it's and of coming well and brand of all Brahma brand consumers. family family very Chopp a that Duplo fire really making stature Malte with on doing Brahma in getting So, the this

lowers as the Brazil it brand is well you the has really more If very not is of of that QX. with we valuable doing two brand rejuvenates overall Brahma really most add up up, and was that it's and really or Brahma stage again, come like like drama brand ago, coming the in quality Chopp the with Duplo three the we stepped years Brahma back Malte, this Brahma it use in

it's way of right I and for tackle with mind, the three Brahma mouth example. able in we think a these themes brand, were hearts combination to the that somehow,

we to. that of so well, is original that biased about the doing about routes a brand somehow just quarter is Brazilian It's the this brand it traditional bar. explode Another the that are very

bars the So occasion. the at closed were

our brand Pasco to original coming is everybody and So regional.

know edginess [ph], we I one this another excited very cooking a say way edge getting BEX are palate, the cooking And pallets brand in we right don't about fire So brand is in is ruble mention. can the of that European, trendy, on there it's is everybody are about us slowly. a the centers. And this very talking but low like, that we in thing that I'm English, it about moving the It's to how boundaries. we read the of temperature, the is the

brands So we architecture of showed archetypes. their you we that that in have

brands somehow, focus that I our are And doing just think amazing.

You've seen the numbers.

it was quarter. right, a this innovation. means price, are channels of Our are is very this This combination this the paying. renovation And and that what mean that consumers resilient

your our us levels, one of don't that the thing could love last in brands. I saying to mention have that X.X question, if know, they that answered people today I that pre-pandemic is we levels So I really that but million

our million X.XX of elect So brands and to pre-pandemic brand. one level that their now loved consumers

So I think that's it.

Carlos Laboy

the real hedge on turnaround. Congratulations. cash JJ. lasting COGS you, stuff brand renovation And is this funds, but for Thank the

Jean Jereissati

you Thank

Operator

comes with next question Matsumoto from Citigroup. The Sergio

Sergio Matsumoto

the you the perhaps in and no composition the more a how the can prices voice morning, the say – than capital in and would the investment you a line, with margin months first than that some occur you recent in spot of return as years and Yes, the I'm few I ago? question. on transitioning when capital circle phase improvement, as of metric the top improve recent that improvement see coming with decreases the good wanted transition that into to expected turnover thanks might mentioned -- the investment over in the might path if we commodities, had on of faster the the -- changes discussed for to of my back improvement wondering taking new then

Lucas Lira

was This hard it's all speculate hard – the Hi, question. speaking. it's Yes. invested could point view the right? latest, very in our different in QX. say right, extent, our that the because the right And capital, in in picture the Lucas for the for on is, right latest think improving movements right, I of longer-term to on reason Sergio, the very Sergio, what were to right, to is change drivers rise commodities QX, I strikingly two return thanks honesty, perspective at in QX, this on

of speculating imply of this term. change to here if I what any can longer gave you would – I So indication me, be

see going forward. really currencies and I think we wait commodities going behave forward, to have how how move

I for following predictability us react in discipline on right? as the currency our That's time think give policy, may is what's headwinds to and the important that's we the us have arise. that side key commodity side give us to to on key hedging

line intact, last on that, continue focus that. helpful will to that's recovery. we continue as that we said if So have growth, we right, in and discipline top two Having to remains obviously deliver the the years, for margin

top priority on a again, and for progress growth we've things top how us. remains line But see line as the let's mentioned time time side. so And

we we of a may volume we're that and past, turnover asset we like more on profile but see seeing remain on in price. to the of It these deliver. the be have we've built may turnover we potential growth be that, in platforms asset fintech continuing it XXXX. as have top the steadfast scale years, momentum than the better and some marketplace side. the top better up, way quarters, given kind line than Some such DXC and with around, other these in the opportunity And as But to have

Let's see.

Sergio Matsumoto

much. Thank you Understood. very

Operator

from comes question with next Fontanesi Bradesco Leandro BBI The

Leandro Fontanesi

blood with official rate, than at quarters. Hi, or recently, discussion much in peso the was Argentina, depreciation we right, previous that market it investors relative the the Argentinean right? the of So was stronger is one to everyone. question have One regarding

there's so you're income that you money on rate. concern they And Argentina the that report have in accounting right, generating to especially that and official net you relative take the your may issues of out use a Argentina to numbers, what

help total EBITDA us Argentina, I actually, are percentage addressing such you of your comes you you with us that also help to report from address could the going or how to like And what million, risk, generating how information understand your if But us provide that as So and understand forward? that risk cash in not does then and BRLXXX which look Argentina much has in previous of majority like it of this is think burning you quarters you're relevant. in means Argentina, Cuba, having I cash are the been outside reducing cash some operation.

in you country? much if out potentially So that money other need of their that in way, depend to costs could you operations allocate taking the from to the that country of on Thanks. understand some don't

Lucas Lira

Yeah. This is Hi, speaking. question. Leandro, thanks for the Luca

health the portfolio The that short-term health in how when forth. think translating of expect, core volatility on we to with above brand of business well market I indicators, the with and line operational there into of first, share in such of brands premium only on you good line, is you the relatively the our not lot what and side, so but is Regarding that's and a Argentina, think core when Plus think, portfolio the so and good news perform country. in in performance, top segments continues as Core the

coming forth. been on volatility been last The instances a on XX have of similar currency once And so faced XX, seeing we XXXX. in volatility out years the However, again so years there other That's past something side, of devaluation have was more Argentina. and time where there fact. macro are more and we the and

for I It's market. the market focused profitable here, because market. we is us approach a it's for on sizable So It's stay it growing think way a and performance micro us. the commercial the a

a what the two, side. remains on we that Number we priority number control protect can what protect, cost So one.

policy in. hedging the where that's comes So

business, the costs hedging Argentinean months So apply they performance in on EBITDA and the And average adhere us right, we protect continue helps to peso the as okay? our for and okay, for to commodities, in XX to Argentinian the Argentina, that Argentina. our

international looking banks. into risk we Argentina we're manage into We in -- between counterparty also look management, how local right banks, cash constantly

to very And to disciplined We the of make continue suppliers. the so the our way running, We right, are there's as exchange clients, there the restrictions country so foreign point in are I the okay? a as with work cash can management, then, keep want lot is work things as place, running the sure there on our of taking in keep to -- our of, on right? diligent operation monitoring right, here markets. that we're money is in seamless more can of and more out and possible, ground tracking of terms with for operating think, situation in And side, --

the to accessing running. but exchange to Argentina that of low, more is imports make to focus we the Our access we still operation have operation running. is keep in sure level want The keep fairly foreign markets

So terms the the towards of year. generation, the of in more is the year the half bigger -- second more in half cash Hope that's generation in priority. first the than cash historically, year this Argentina is And of helps. skewed

Leandro Fontanesi

for Yes. final Jean Thank Mr. would The you, remarks. to I turn his floor Lucas. to Jereissati is the like Q&A over over. session

Jean Jereissati

time it So, joined analysts, was thank think, I -- like HX today, the for I at all. who To -- everyone up, and you better attention. thank, your all I than call time wrap look QX. to

have EBITDA of and short-term deliver it an the Thank And of Ambev and on growth to that continue for Brazil, track we great We even year, consolidated terms a had remain on ambitions can growth stronger bottom in confident volatility was our day. and that to get to have in line much. Brazil ahead ROIC. the back you See think Ambev, are we trend. our will main XXXX HX, you okay? for HX growth, very we October cost for improve I a organic great and organic we vigilant the

Operator

This you have day. and participating good for Ambev's concludes call. a your Thank conference

Ambev (ABEV) 29 Jul 222022 Q2 Earnings call transcript