• Consolidated EBITDA Growth: 37% over the past five years.
• Free Cash Flow to Equity: Nearly BRL 18 billion, a 37% improvement versus last year.
• EBITDA Growth: 11.4% organically, 12.1% excluding Argentina.
• Normalized Profit Decline: 2.3%.
• Gross Margin Expansion: 170 basis points organically, 190 basis points excluding Argentina.
• EBITDA Margin Expansion: 200 basis points organically, 220 basis points excluding Argentina.
• Return on Invested Capital: Declined to 18.6%.
• Cash Flow from Operating Activities: Grew 5.6%.
• Cash and Cash Equivalents: Approximately BRL 29 billion at the end of 2024.
• Share Buyback Program Execution: Approximately 45% completed.
• Dividend Distribution: BRL 2 billion approved to be paid in April.
• Brazil Beer Volume Growth: 0.6% for the full year.
• Digital Platform Transactions: Over 88% of gross revenues transacted through B2B platform.
• Monthly Active Buyers on Digital Platform: 1.3 million, a 14% increase versus last year.

• Warning! GuruFocus has detected 4 Warning Signs with ABEV.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ambev SA (NYSE:ABEV) reported a 37% growth in consolidated EBITDA over the past five years, generating nearly BRL65 billion in free cash flow to equity.
• The company maintained top-line momentum with beer gaining or maintaining market share in the majority of its top 10 markets.
• Digital transformation has been a key enabler, with over 88% of gross revenues transacted through their B2B platform, Bs.
• Ambev SA (NYSE:ABEV) achieved a double-digit consolidated EBITDA growth with margin expansion in all business units for the second consecutive year.
• The company executed approximately 45% of its current share buyback program and completed the payment of IOC and dividend payout approved in 2024.

Negative Points

• Normalized profit declined by 2.3% due to significant tax headwinds in Brazil and challenges in the Argentine market.
• The effective tax rate increased significantly, with nearly 60% of net value added going to taxes, up from roughly 53% last year.
• Return on invested capital declined to 18.6% due to NOPAT margin contraction from tax headwinds in Brazil.
• Skol, one of the core brands, experienced a decline in volumes in 2024, which is a priority for improvement in 2025.
• The company faces cost headwinds in 2025, particularly in Brazil, due to the depreciation of the Brazilian real and increased aluminum prices.

Q & A Highlights

Q: Can you elaborate on the decline of Skol volumes in 2024 and its priority status for 2025? A: Carlos Lisboa, CEO, explained that Skol, alongside Brahma, is one of the most important brands for Ambev in terms of volume and top-line contribution. Despite strong performances from other brands, Skol did not fare well in 2024. It remains a priority due to its significant market presence and consumer relevance, with plans to support it through new marketing initiatives.

Q: How did regional performance vary in Beer Brazil during Q4, and what was the impact of weather? A: Carlos Lisboa noted that the North and Northeast regions led in volume growth, consistent with trends throughout the year. The adverse weather impacted beer consumption occasions, but these regions continued to perform strongly.

Q: How do you view the position of your mega brands within the portfolio and their future strategy? A: Carlos Lisboa emphasized the importance of a diverse portfolio that includes both domestic and global brands. The strategy is to move the category forward by engaging more consumers and expanding into new occasions, supported by digital transformation and data insights.

Q: What are the plans for inorganic growth, and how does it fit into your strategy? A: Lucas Machado Lira, CFO, stated that while the primary focus remains on organic growth, the company is open to inorganic opportunities that align with strategic goals. These could include enhancing client services or expanding the portfolio, but any such moves would be disciplined and strategically sound.

Q: What is the outlook for SG&A expenses in 2025, particularly in light of Skol's focus and organic growth? A: Lucas Machado Lira explained that the company aims to continue investing in sales and marketing while achieving efficiencies in distribution and administration. The goal is to manage SG&A growth at or below inflation, leveraging digital capabilities to optimize operations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.