Ambev S.A. (NYSE:ABEV) Q3 2023 Earnings Call Transcript October 31, 2023
Operator: Good morning, good afternoon, and thank you for waiting. We would like to welcome everyone to Ambev's Third Quarter 2023 Results Conference Call. Today with us, we have Mr. Jean Jereissati, CEO for Ambev; and Mr. Lucas Lira, CFO and Investor Relations Officer. As a reminder, a slide presentation is available for downloading on our website, ri.ambev.com.br, as well as through the webcast link of this call. We would like to inform you that this event is being recorded and all participants will be in a listen-only mode during the company's presentation. After Ambev's remarks are completed, there will be a Q&A section when we kindly ask that each participating analyst asks only one question. At that time, further instructions will be given.
A closeup shot of a beer tap pouring a golden lager.
[Operator Instructions] Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Ambev's management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Ambev and could cause results to differ materially from those expressed in such forward-looking statements. I would also like to remind everyone that, as usual, the percentage changes that will be discussed during today's call are both organic and normalized in nature and, unless otherwise stated, percentage changes referred to comparisons with third-quarter 2022 results.
Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly as part of Ambev's normal activities. As normalized figures are non-GAAP measures, the company discloses the consolidated profit, EPS, operating profit and EBITDA on a fully reported basis in the earnings release. Now, I'll turn the conference over to Mr. Jean Jereissati. Mr. Jereissati, you may begin your conference.
Jean Jereissati: Hello everyone and thank you for joining our Q3 earnings call. In our last call, I left you with two final messages. We were confident in terms of our ability to deliver operational leverage thanks to sustained commercial momentum and an improved costs and expenses outlook, but that we had less visibility in terms of industry volumes in Brazil and on the overall operating environment in Argentina. Looking at our Q3 results, it's great to see that the team delivered operational leverage once again, while industry volumes in Brazil and our business in Argentina were both resilient. In fact, our performance really came together in Q3. Net revenues grew roughly 19%, EBITDA grew nearly 44% and grew over 30% ex-Argentina, with 560 basis points of EBITDA margin expansion.
Normalized profit grew about 25%, thanks to better EBITDA and better finance results. And cash flow from operating activities increased almost 30%, totaling close to $8 billion, which is about $1.8 billion ahead of 2022. Once more, it was great to see that our focus on the things we can control has continued to pay off. Let's look by geography, starting with Brazil beer. Industry was slightly positive while our volumes declined by about 1%, as we cycled the record levels set in Q3 2022. Premium volumes outperformed once again, while our core brands grew pretty much in line with the industry, and our value brands declined more than 40% versus last year. Our commercial strategy remains in good shape. Our premium and super premium brands grew low teams, led by Corona, Original and Spaten.
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