AmBev Reports Third Quarter 2008 Results

Nov 06, 2008, 01:00 ET from AmBev

SAO PAULO, Brazil, Nov. 6 /PRNewswire-FirstCall/ -- Companhia de Bebidas das Americas - AmBev [BOVESPA: AMBV4, AMBV3; and NYSE: ABV, ABVc], announces today its results for the third quarter 2008 (Q3 2008). The following financial and operating information, unless otherwise indicated, is presented in nominal Reais and prepared in accordance with Brazilian GAAP and should be read in conjunction with our quarterly financial information for the three and nine-months period ending September 30, 2008. Our press release segregates the impact of organic changes from those arising from changes in scope or currency translation. Scopes represent the impact of acquisitions and divestitures and the start-up or termination of activities. Comparisons, unless otherwise stated, refer to the third quarter of 2007 (Q3 2007). The year-to-date (YTD) changes in Reais were restated to properly reflect organic growth excluding currency changes. Values in this release may not add up due to rounding.


AmBev continues to grow as Brazil CSD & Nanc volumes recover and Quinsa delivers another strong quarter.

Solid volume growth: Volumes increased organically by 6.1% during Q3 2008. Brazil Beer volumes were soft (+1.1%) as consumer spend continues to be under pressure from food inflation, coupled with poor weather in September in key regions. Brazil CSD & NANC delivered very strong growth of 14.8%. Our operations in Quinsa delivered another quarter of double-digit volume growth (+12.9%) while North America volumes grew by 2.0%.

Market Share improvement: We continue to make progress on market share with both Argentina and Canada delivering share growth for the quarter year over year. In Brazil, CSD market share in the quarter reached 17.8% (+80 bps yoy) and Beer market share recovered after losses in July, reaching 67.2% in the quarter (-50 bps yoy).

Double-digit top line growth: Net sales increased organically by 10.1% during Q3 2008. Net revenues per hectoliter (+3.8%) were impacted positively by price increases, our continued focus on revenue management best practices and the development of the premium segment in most of our major markets.

Cost of Goods Sold (COGS) and Selling, General & Administrative (SG&A) expenses: COGS per hectoliter increased 10.9% in the quarter due to higher commodity prices in Quinsa and Labatt. These increases were partly offset by expected gains arising from sugar hedges, currency appreciation and efficiency projects in Brazil where COGS per hectoliter grew by only 3.0%, well below the level of inflation. SG&A (excl. depreciation & amortization) increased organically by 7.1% in Q3 2008 as higher expenses in Quinsa and Hila-Ex were partly offset by savings in Brazil CSD & NANC.

EBITDA and EBITDA Margin: Our EBITDA reached R$2,033.7 million during Q3 2008, which represents an organic increase of 6.4%. Our EBITDA margin in the third quarter decreased organically by 120 bps to 42.3%.

Payout and Financial Discipline: In Q3 2008 we paid dividends and interest on own capital (IOC) totaling R$987.4 million and declared additional dividends and IOC of R$839.6 million which was paid on October 13th. There were no share buybacks in the quarter.

    Financial Highlights - AmBev Consolidated
    R$ million                                             % As          %
                              3Q07         3Q08          Reported      Organic

    Total volumes            32,803.7     34,445.1         5.0%         6.1%

    Beer                     23,970.6     24,387.5         1.7%         3.0%
    CSD and NANC              8,833.1     10,057.6        13.9%        14.1%

    Net sales                 4,641.7      4,809.9         3.6%        10.1%
    Gross profit              3,097.7      3,127.8         1.0%         6.4%
    Gross margin                 66.7%        65.0%     -170 bps      -80 bps
    EBITDA                    1,999.3      2,033.7         1.7%         6.4%
    EBITDA margin                43.1%        42.3%      -80 bps     -120 bps
    Net Income                  589.8        949.0        60.9%
    No. of share outstanding
     (millions)                 620.8        614.0        -1.1%
    EPS (R$/shares)              0.95         1.55        62.7%
    EPS excl. goodwill
     (R$/shares)                 1.61         2.36        46.2%

    Financial Highlights - AmBev Consolidated
                                                          % As           %
    R$ million                YTD 07      YTD 08        Reported       Organic

    Total volumes            98,860.9    103,007.0        4.2%          4.0%

    Beer                     71,323.0     73,629.0        3.2%          3.0%
    CSD and NANC             27,538.0     29,378.0        6.7%          6.7%

    Net sales                13,821.8     14,397.1        4.2%          8.5%
    Gross profit              9,166.8      9,435.2        2.9%          6.9%
    Gross margin                 66.3%        65.5%      -80 bps      -40 bps
    EBITDA                    5,884.3      6,086.5        3.4%          7.1%
    EBITDA margin                42.6%        42.3%      -30 bps      -40 bps
    Net Income                1,684.4      2,094.9        24.4%
    No. of share outstanding
     (millions)                 620.8        614.0        -1.1%
    EPS (R$/shares)              2.71         3.41        25.8%
    EPS excl. goodwill
     amortization  (R$/shares)   4.68         5.84        24.7%

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