Ambev (ABEV3) Q2 2024 earnings summary

Executive summary

• Achieved double-digit normalized EBITDA growth (+15.9% year-over-year) and margin expansion, led by strong commercial momentum and operational leverage in Brazil and CAC, with Brazil Beer volumes up 2.9% and Brazil NAB up 7.7%.

• Free cash flow improved year-over-year, with a 9.0% increase, and cash flow from operating activities reached about BRL 3.4 billion.

• Normalized profit declined 8.3% due to higher income taxes in Brazil.

• Focused brand investments and premiumization drove all-time high brand health and volume growth, especially in premium and core plus segments.

• Community support initiatives continued in Rio Grande do Sul, including over 5 million liters of water and BRL 16 million in donations.

Financial highlights

• Net revenue for Q2 2024 was R$20,044.2 million (+4.8% organic vs LY), with gross profit of R$9,984.2 million (+9.1% organic vs LY).

• EBITDA grew 15.9% year-over-year, with margin up 300 bps to 29.0%; gross margin expanded 200 bps organically.

• Cash flow from operating activities reached BRL 3.4 billion, and free cash flow grew 9.0% year-over-year.

• Net revenue per hectoliter increased across all segments, notably +6.8% in Brazil NAB and +3.9% in Brazil Beer.

• Net debt position at June 30, 2024 was R$11.9 billion, slightly lower than R$12.8 billion at year-end 2023.

Outlook and guidance

• Confident in continued volume growth, especially in Brazil, with a focus on innovation, premiumization, and new product launches.

• Taxes in Brazil remain the main challenge for the year, but cash flow is expected to remain solid.

• Pricing strategy will remain nimble, with price increases in line with inflation and brand/channel mix.

• Bulk of cash generation expected in H2, particularly Q4.

• No material impacts expected from new or amended IFRS standards in 2024.