Ambev Reports 2017 Second Quarter Results Under IFRS

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Jul 27, 2017, 02:00 ET

SÃO PAULO, July 27, 2017 /PRNewswire/ – Ambev S.A. [BOVESPA: ABEV3; NYSE: ABEV] announces today 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 30^th, 2017 filed with the CVM and submitted to the SEC.

Operating and Financial Highlights

Top line performance: Top line was up 4.8% in 2Q17, driven by growth in all our 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 ABI and our 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): Our 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: SG&A was up 1.3% in 2Q17 while cash SG&A (excluding depreciation and amortization) up 1.7%, below our weighted average inflation (around 5.1%), due to efficiency gains in sales & marketing and cost savings in administrative expenses.

EBITDA, Gross margin and EBITDA margin: 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 and EPS: 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 Generation and CAPEX: 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%).

Pay-out and Financial discipline: Year to date, we have paid/announced R$ 3.6 billion in dividends. As of June 30th, 2017, our net cash position was R$ 3,821.4 million.

Financial highlights - Ambev consolidated			% As	%			% As	%
*R$ million*	2Q16	2Q17	Reported	Organic	YTD16	YTD17	Reported	Organic
Total volumes	35.667,8	35.660,3	0,0%	-1,1%	75.625,1	76.965,4	1,8%	0,8%
Net sales	10.377,2	10.268,0	-1,1%	4,8%	21.942,3	21.509,8	-2,0%	6,5%
Gross profit	6.482,6	6.219,8	-4,1%	1,4%	14.087,4	12.938,4	-8,2%	-0,2%
Gross margin	62,5%	60,6%	-190 bps	-200 bps	64,2%	60,2%	-400 bps	-410 bps
Normalized EBITDA	4.204,6	3.943,3	-6,2%	-0,7%	9.469,0	8.299,5	-12,4%	-4,6%
Normalized EBITDA margin	40,5%	38,4%	-210 bps	-210 bps	43,2%	38,6%	-460 bps	-450 bps
Profit	2.172,5	2.124,8	-2,2%		5.066,5	4.414,7	-12,9%
Normalized Profit	2.194,7	2.141,5	-2,4%		5.095,0	4.457,5	-12,5%
EPS (R$/shares)	0,13	0,13	-1,7%		0,31	0,27	-12,5%
Normalized EPS	0,13	0,13	-1,7%		0,31	0,27	-12,1%

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

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 first quarter of 2016 (1Q16). Values in this release may not add up due to rounding.

SOURCE Ambev S.A.