Ambev Reports 2014 Fourth Quarter And Full Year Results Under IFRS

SAO PAULO, Feb. 26, 2015 /PRNewswire/ -- Ambev S.A. (BOVESPA: ABEV3; NYSE: ABEV) announces today its results for the fourth quarter and full year 2014. 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 twelve-month period ended December 31, 2014 filed with the CVM and submitted to the SEC.

Operating and Financial Highlights

Top line performance: Net revenues accelerated in 4Q14 and grew 11.5%, driven by top line growth in all of our operations (Brazil +10.4%, HILA-Ex +17.5%, LAS +18.7% and Canada +1.0%), leading to a 10.9% growth in FY 2014. Volumes in 4Q14 were up 0.3%, with positive contributions in Brazil Beer (+1.5%), HILA-Ex (+11.9%) and Canada (+0.3%), partially offset by a decline in Brazil CSD & NANC (-1.7%) and LAS (-2.9%), while Net Revenue per hectoliter (NR/hl) increased 11.2%, driven by our revenue management initiatives, the benefit of premium mix and the increased weight of direct distribution in Brazil. In the full year, our volumes increased 2.9% while NR/hl was up 7.8%.

Cost of Goods Sold (COGS): Our COGS increased 16.1% in 4Q14 and 12.9% in the full year, whereas on a per hectoliter basis, costs increased 15.8% and 9.8%, respectively. Our performance in the quarter was impacted by unfavorable currency hedges, higher inflation in Argentina, packaging mix in Brazil and industrial depreciation growth, partially offset by our commodities hedges and procurement savings initiatives.

Selling, General & Administrative (SG&A) expenses: SG&A expenses (excluding depreciation and amortization) were up 12.3% in the quarter and 11.7% in FY 2014. This year was marked by strong investments in sales & marketing initiatives related to the 2014 FIFA World Cup, mainly in Brazil. Along with that, higher distribution costs as a result of the increased weight of direct distribution in Brazil and inflation in Argentina were also important drivers of SG&A growth, partially offset by administrative expenses, which grew below inflation.

EBITDA, Gross margin and EBITDA margin: Our Normalized EBITDA grew 7.6% in 4Q14 and 7.5% in the full year, reaching R$ 6,801 million and R$ 18,276 million, respectively. Normalized EBITDA margin contracted 200 basis points to 55.6% in the quarter, fully explained by the R$ 300 million one-time gain related to recovery of restricted funds recorded in 4Q13. In the full year, our Normalized EBITDA margins were down 160bps to 48.0%.

Normalized Net Profit and EPS: Normalized Net Profit was R$ 4,722 million in 4Q14 and R$ 12,451 in FY 2014, up 8.9% versus 2013 driven by EBITDA growth, better financial results and a lower effective tax rate. Normalized Earnings Per Share (EPS) was R$ 0.29 in the quarter and R$ 0.77 in the full year.

Operating Cash generation and CAPEX: We generated R$ 9,016 million of cash from our operations in the quarter and R$ 18,781 million in FY 2014, a 7.5% increase versus 2013 mainly as a result of stronger operational performance and better working capital management. During the fourth quarter of 2014 capital expenditure reached R$ 1,276 million, leading to a R$ 4,493 million total capex in the year, of which R$ 3.1 billion were invested in Brazil.

Pay-out and Financial discipline: During 2014, we returned close to R$ 12.0 billion through dividends and IOC to shareholders, our biggest annual cash payout. Still in December 2014, we announced two additional IOC payments totaling R$ 3.5 billion that were fully paid during January 2015. On February 25^th, we announced a buyback program totaling R$ 850 million that we expect to be fully executed in 2015. As of December 31^th, 2014, our net cash position was R$ 7,713.3 million, not yet accounting for the distributions announced in December, 2014.

This press release segregates the impact of organic changes from those arising from changes in scope or currency translation. Scope changes represent the impact of acquisitions and divestitures, the start up or termination of activities or the transfer of activities between segments, curtailment gains and losses and year over year changes in accounting estimates and other assumptions that management does not consider as part of the underlying performance of the business. Unless stated, percentage changes in this press release are both organic and normalized in nature. Whenever used in this document, the term "normalized" refers to performance measures (EBITDA, EBIT, Profit, EPS) before special items adjustments. Special items are either income or expenses which do not occur regularly as part of the normal activities of the Company. They are presented separately because they are important for the understanding of the underlying sustainable performance of the Company due to their size or nature. Normalized measures are additional measures used by management and should not replace the measures determined in accordance with IFRS as indicators of the Company's performance. Comparisons, unless otherwise stated, refer to the fourth quarter of 2013 (4Q13 Reference Base) or full year '2013 (FY13 Reference Base), as the case may be. Values in this release may not add up due to rounding.

Note: Earnings per share calculation is based on outstanding shares (total existing shares excluding shares held in treasury).

SOURCE Ambev S.A.