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Ambev Reports 2014 Second Quarter Results Under IFRS

SAO PAULO, July 31, 2014 /PRNewswire/ -- Ambev S.A. [BOVESPA: ABEV3; NYSE: ABEV] announces today its results for the 2014 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, 2014 filed with the CVM and submitted to the SEC.

Operating and Financial Highlights

Top line performance: During the quarter we delivered 9.2% net revenue growth. Volume expanded 4.9% while net revenue per hectoliter (NR/hl) grew 4.1%. This performance was mainly driven by a double-digit result in Brazil (11.3% net revenue growth), in both Beer (+11.2%) and CSD (+11.7%), and Hila-Ex (+19.2% net revenue growth).

Cost of Goods Sold (COGS): Our COGS increased 15.5% in 2Q14. On a per hectoliter basis, costs increased 10.2%, mainly explained by a one time negative packaging mix related to the 2014 FIFA World Cup in Brazil on top of the impact from higher currency hedges in Brazil, LAS and Canada, partially offset by favorable commodities hedges.

Selling, General & Administrative (SG&A) expenses: SG&A expenses (excluding depreciation and amortization) were up 6.8% in the quarter. This was mainly driven by (i) sales and marketing expenses, as this quarter concentrated most of the initiatives related to the 2014 FIFA World Cup; (ii) higher distribution costs, impacted by volumes and a higher weight of direct distribution in Brazil and (iii) inflationary pressures in Argentina.

EBITDA, Gross margin and EBITDA margin: Our Normalized EBITDA grew 5.4% in 2Q14, reaching R$ 3,327.4 million. Normalized EBITDA margin contracted 150 basis points to 40.7% driven by a gross margin contraction of 210 basis points to 62.8%, mainly explained by the one-time negative packaging mix impact in Brazil.

Normalized Net Profit and EPS: Our Normalized Net Profit was R$ 2,222.7 million in the quarter, 16.0% above last year, positively impacted by our operational performance and a lower effective tax rate. Normalized Earnings Per Share (EPS) were up 16.7% to R$ 0.14 in the quarter.

Operating Cash generation and CAPEX: Cash generated from our operations in 2Q14 improved 15.7% when compared to the same period last year, totaling R$ 2,982.6 million. During the second quarter of 2014 we invested a total of R$ 1,120.6 million in capital expenditures.

Pay-out and Financial discipline: On July 14th, we announced a dividend and interest on capital distribution totaling R$ 2.5 billion that will be paid as from August 28th. Year to date, we have already paid/announced close to R$ 8.5 billion in cash payout, a 67% increase over the same period of last year. As of June 30th, our net cash position was R$ 3,748.8 million, not accounting yet for distribution announced on July 14th, 2014.

Financial Highlights – Ambev

2Q13


% As

%

YTD13


% As

%

Consolidated 

Reference

Reference

R$ million

Base

2Q14

Reported

Organic

Base

YTD14

Reported

Organic

Total volumes

37,303.1

39,310.6

5.4%

4.9%

77,521.1

82,295.2

6.2%

5.9%

Beer

27,163.5

28,580.6

5.2%

4.6%

55,947.6

59,785.8

6.9%

6.5%

CSD and NANC

10,139.6

10,730.0

5.8%

5.8%

21,573.5

22,509.5

4.3%

4.3%










Net sales

7,570.2

8,177.4

8.0%

9.2%

15,402.2

17,222.5

11.8%

13.1%

Gross profit

4,903.2

5,136.8

4.8%

5.8%

10,037.4

11,173.5

11.3%

12.7%

Gross margin

64.8%

62.8%

-200 bps

-210 bps

65.2%

64.9%

-30 bps

-20 bps

EBITDA

3,233.3

3,320.2

2.7%

4.5%

6,856.4

7,364.6

7.4%

9.8%

EBITDA margin

42.7%

40.6%

-210 bps

-190 bps

44.5%

42.8%

-170 bps

-120 bps

Normalized EBITDA

3,238.6

3,327.4

2.7%

5.4%

6,862.7

7,378.4

7.5%

10.3%

Normalized EBITDA margin

42.8%

40.7%

-210 bps

-150 bps

44.6%

42.8%

-180 bps

-110 bps

Profit

1,911.3

2,215.6

15.9%


4,284.6

4,812.4

12.3%


Normalized Profit

1,916.6

2,222.7

16.0%


4,290.8

4,826.1

12.5%


EPS (R$/shares)

0.12

0.14

16.8%


0.27

0.30

12.6%


Normalized EPS

0.12

0.14

16.7%


0.27

0.30

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 second quarter of 2013 (Q2 2013). Values in this release may not add up due to rounding.

SOURCE Ambev America Beverage

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