Brazil: Ambev reports 0.7% decline in EBITDA in Q2
Ambev S.A. announced on July 27 its results for the 2017 second quarter. The following operating and financial information, unless otherwise indicated, is presented in nominal Reais and prepared according to International Financial Reporting Standards (IFRS), and should be read together with our quarterly financial information for the six-month period ended June 30th, 2017 filed with the CVM and submitted to the SEC.
Ambev said its top line was up 4.8% in 2Q17, driven by growth in all its international operations: Latin America South (LAS) (+36.2%), Central America and the Caribbean (CAC) (+6.9%) and Canada (+1.4%), partially impacted by Brazil (-4.1%). In Brazil, volumes declined by 4.7%, while NR/hl was up 0.7%. In CAC, organic volumes were up 1.6%, with a NR/hl growth of 4.2%, while reported volumes increased by 26.2% as a result of the swap of assets carried out with AB InBev and the company’s operations in Panama. In LAS, volumes grew by a solid 12.2% and NR/hl was up 21.4%. In Canada, volumes were slightly down (-0.4%), while NR/hl grew by 1.8%.
Cost of Goods Sold (COGS) increased by 10.6% in the quarter and, on a per hectoliter basis, by 11.6%. Cash COGS (excluding depreciation and amortization) grew by 11.2% while, on a per hectoliter basis, by 12.2%, mainly due to inflationary pressures and unfavorable FX in Brazil and LAS.
Selling, General & Administrative (SG&A) expenses were up 1.3% in 2Q17 while cash SG&A (excluding depreciation and amortization) up 1.7%, below Ambev’s weighted average inflation (around 5.1%), due to efficiency gains in sales & marketing and cost savings in administrative expenses.
The company’s normalized EBITDA reached R$ 3,943.3 million (-0.7%) in 2Q17, with gross margin of 60.6% (-200bps) and EBITDA margin of 38.4% (-210bps).
Normalized Net Profit was R$ 2,141.5 million in 2Q17, 2.4% lower than in 2Q16, as the EBITDA organic decline and the negative impact of currency translation due to the appreciation of the Brazilian Real were partially offset by the reduction of net financial expenses. Normalized EPS in the quarter was R$ 0.13.
Cash generated from operating activities in 2Q17 was 2,424.6 (+16.5%) while CAPEX reached 751 million (-34.8%). Year to date, cash generated from operating activities totaled R$ 4,409.1 million, compared to a negative balance of R$ 132.9 million in the same period of 2016. CAPEX year to date is R$ 1.3 billion (-29.5%).
Year to date, Ambev has paid/announced R$ 3.6 billion in dividends. As of June 30th, 2017, the company’s net cash position was R$ 3,821.4 million.
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