Brazil: Ambev sees 19.3% jump in third-quarter net profit

Brazilian brewer Ambev SA on October 31 reported a 19.3% jump in net profit on an organic basis, lifting its shares as lower aluminum prices and favorable exchange rates offset a dip in sales volumes, Reuters reported.

The Sao Paulo-based company said the exchange rate benefit and lower commodity prices helped reduce costs, which was welcomed by analysts even as its top line fell short of market expectations.

Ambev shares were up more than 4% in morning trade, among the top gainers on Brazil's benchmark stock exchange index Bovespa, which was down 0.2%.

Total net revenue for the third quarter came in at 20.32 billion reais ($4.03 billion), below analysts' expectations of 21.22 billion reais, based on LSEG data.

Overall, sales were lower, with an increase of 13.6% in Central America and the Caribbean overshadowed by a fall of 9.4% in South Latin America and a 13.1% drop in Canada.

"Sales weren't great," BTG Pactual analysts led by Thiago Duarte said. "But margins soared, driven by selling, general, and administrative expenses dilution ... That's what we call cost saving."

In Brazil, sales continued to grow, led by Brazil Beer. The company said premium beer brands led by Corona, Spaten, Stella Artois and Original grew by a low-teens percentage, outperforming the industry.

The subsidiary of Belgium's Anheuser-Busch InBev reported a profit of 4.02 billion reais, versus the 3.45 billion reais average estimate of analysts polled by LSEG.

Earnings before interest, tax, depreciation and amortization (EBITDA) grew organically 43.7% year-on-year to 6.58 billion reais, with its EBITDA margin jumping 520 basis points on a sequential basis to 32.4%.

That represents a "solid earnings beat, despite the topline miss," Bernstein analysts led by Nadine Sarwat wrote in a note to clients.

The company forecast fourth quarter EBITDA to surpass the 17.1% growth achieved in 2022.

($1 = 5.0479 reais)

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .