Ambev Shares Gain Ahead of Q2, While EBITDA Estimates Remain Tight

Ambev is set to announce its second-quarter earnings before markets open on B3 and NYSE on Thursday, July 30. The company’s webcast is scheduled to start at 12:30 p.m. Brasília time, or 11:30 a.m. in New York. Revenue projections from Google Finance are around R$20.83 billion, while Public.com shows an ADR EPS estimate close to $0.04. These are independent analyst forecasts, not official company guidance. Ambev reported normalized local EPS of R$0.24 in the first quarter, but seasonality impacts limit direct comparison. Ambev

ABEV changed hands at $3.15 as of 16:47 UTC on Tuesday, rising approximately 2.6%. Trading volume stood at 9.13 million shares, compared with a daily average of 22.71 million. The ADR traded between $3.09 and $3.17 during the session. Shares of Brazil’s ABEV3 were near R$16.25, also advancing about 2.5%. Market capitalization was reported at nearly $49.6 billion at that point. The ADR was still about 9% under its yearly peak of $3.45. Trading Economics

Net revenue for the first quarter was R$22.46 billion, remaining almost unchanged as reported. Organic revenue increased by 8.1%, while normalized EBITDA climbed 10.1%. This resulted in a 60 basis point improvement in normalized EBITDA margin, now at 33.6%. Normalized profit edged up just 0.3%, totaling R$3.83 billion for the quarter. Robust Thursday numbers are expected to sustain double-digit EBITDA growth and additional margin gains. However, investors require a wider base of volume support, not just price increases. Growth quality is a key issue. SEC

Overall organic volume edged up 0.1% in the first quarter. Brazil Beer increased by 1.2%, with Central America and Caribbean volumes up 7.7%. Latin America South slipped 0.5%, while Canada volumes were down 2.0%. Brazil’s non-alcoholic beverage volume decreased 3.9% over the period. Across the company, revenue per hectoliter rose 8.0% organically. Pricing and mix remained the main drivers of earnings. An upcoming breakdown of regional volumes on Thursday will indicate if demand recovery has become more widespread. SEC

Brazil Beer reported a 14.6% year-on-year organic rise in cash cost per hectoliter in Q1, a figure that does not factor in sales of non-Ambev marketplace items. Despite this, Brazil Beer normalized EBITDA increased 7.6%, although margin slipped by 60 basis points. Management reaffirmed its full-year cost growth forecast of 4.5% to 7.5%, signaling an expectation of notable cost moderation over the next three quarters. However, when this will occur is still unclear. Investors are expected to scrutinize that outlook as it relates to currency, aluminum, and agricultural commodity price developments. SEC

Ambev reported R$17.99 billion in cash and cash equivalents on its March balance sheet. Current investment securities contributed an additional R$1.65 billion in liquid assets. Interest-bearing debt was recorded at R$3.11 billion, resulting in net cash of R$16.53 billion. Operating cash flow for the first quarter totaled R$3.16 billion, representing a 162.5% increase and marking the company’s highest first-quarter cash generation in a decade. Of the total, R$2.29 billion held in Bolivia remained subject to remittance restrictions. Under the ongoing 208 million-share buyback program, Ambev repurchased 27.48 million shares for R$413 million. SEC

Net finance expense expanded to R$1.06 billion compared with R$856.4 million. Losses on derivatives almost doubled on the year, totaling R$537.6 million. Ambev chiefly attributed this to carry costs tied to Brazilian foreign-exchange and commodity hedging. This factor contributed to capping normalized profit growth at just 0.3%. Normalized EPS for the first quarter edged up only 0.5%, even as EBITDA posted a stronger increase. Finance costs continue to play a significant role in Thursday’s reported bottom line. SEC

In April, Ambev was issued fresh tax assessments amounting to roughly R$4.3 billion, tied to foreign tax credits taken for the 2020 and 2023 tax years. The company contests these assessments and is preparing to challenge them before Brazil’s administrative court. There is no determination yet on any financial obligation. Investors should view the R$4.3 billion as contested exposure rather than a definite outflow. Further detail on timing, provisions, or legal risk may emerge in Thursday’s disclosures. SEC

Ambev shares at $3.15 changed hands at about 16 times trailing earnings. Trailing EPS was near $0.19, based on Google Finance data. The ADR traded around 50% above its 12-month low of $2.10. The Ambev investor-relations page shows four Buy, eleven Neutral, and three Sell recommendations, reflecting a cautious stance. Thursday’s results will need to deliver either stronger volumes or wider margins to drive further rerating. Google