Ambev Reports 2013 Fourth Quarter And Full Year Results Under IFRS

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Feb 26, 2014, 03:00 ET

SAO PAULO, Feb. 26, 2014 /PRNewswire/ -- Ambev S.A. [BOVESPA: ABEV3; NYSE: ABEV] announces today its results for the fourth quarter and full year 2013 results. 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, 2013 filed with the CVM and submitted to the SEC.

Operating and Financial Highlights

Top line performance: Net revenues accelerated when compared to the first three quarters of the year and grew 10.0% in 4Q 2013, leading to a 6.4% growth in the FY 2013. Volumes declined 1.4% (-3.2% in the full year) being more than offset by a 11.6% growth in net revenue per hectoliter (NR/hl) during the quarter (+9.9% for FY 2013), mainly driven by our revenue management initiatives across our operations, greater weight of direct distribution and higher share of premium in Brazil. Albeit consolidated volumes remained in negative territory, we saw an improvement versus last quarter trends in all divisions and, thanks to a solid NR/hl performance, (Brazil Beer +11.7%, Brazil CSD & NANC +13.1%, HILA-ex +5.5%, LAS +16.2% and Canada +2.5%), this was a quarter of top line growth in all our divisions (Brazil Beer +7.9%, Brazil CSD & NANC +11.8%, HILA-ex +20.9%, LAS +16.5%, while Canada +2.1%).

Cost of Goods Sold (COGS): COGS was up 6.8% in 4Q 2013 and 7.0% for the full year, whereas on a per hectoliter basis, costs increased 8.4% and 10.5%, respectively. Although currency hedges continued to be a headwind, our aluminum, barley, sugar and corn hedges once again helped to soften this pressure. The fourth quarter confirmed the improvement already seen in 3Q, with COGS/hl growing 8.5% in H2 versus 13.9% in H1.

Selling, General & Administrative (SG&A) expenses: SG&A expenses (excluding depreciation and amortization) were up 10.8% in the quarter and 7.9% in FY 2013. Given our front loaded commercial investments in the year, mainly during the FIFA Confederations Cup, our 4Q 2013 performance was positively impacted by lower year over year sales and marketing expenses, while administrative expenses were impacted by timing of variable compensation accruals, partially offset by our cost savings initiatives. Distribution costs were impacted by a higher weight of direct distribution in Brazil, which reached c.70% in 4Q this year and c.67% for FY 2013.

EBITDA, Gross margin and EBITDA margin: Our Normalized EBITDA grew 18.0% in 4Q 2013, reaching R$ 6,453.7 million, which represents another improvement on the pace of year over year growth seen along the first three quarters of 2013 (1Q +2.6%, 2Q +6.8%, 3Q +9.5%), leading to a 10.5% growth in FY 2013, reaching R$ 17,485.1 million. Gross margin performance significantly improved in 4Q 2013 (ie, +90 basis points versus contraction in the first three quarters of the year), driven by expansion in Brazil Beer and all of our international divisions. Our strong finish to the year allowed us to achieve a Normalized EBITDA margin of 58.4% in the quarter (+400 bps expansion) and 50.3% for FY 2013 (+180 bps), also helped by a one-time gain of R$ 300 million in other operating income related to recovery of restricted funds in Brazil.

Operating Cash generation and Profit: Cash generated from our operations in 4Q 2013 improved 13.1% when compared to the same period last year, totalling R$ 8,386.3 million (R$ 17,377.3 million for the full year, was an increase of 10.1% when compared to 2012). Our Normalized Profit was R$ 4,766.6 million in the quarter, positively impacted by our operational performance and lower effective tax rate, reaching R$ 11,383.3 million in the full year. Normalized Earnings Per Share (EPS) corresponded to R$ 0.30 in the quarter and R$ 0.75 for FY 2013.

Financial Highlights – Ambev	4Q12		% As	%	FY12		% As	%
Consolidated	Reference		% As	%	Reference		% As	%
*R$ million*	Base	4Q13	Reported	Organic	Base	FY13	Reported	Organic
Total volumes	49,700.3	48,988.6	-1.4%	-1.4%	169,839.4	165,169.2	-2.7%	-3.2%
Beer	35,990.8	35,267.7	-2.0%	-2.0%	122,478.6	118,811.3	-3.0%	-3.6%
CSD and NANC	13,709.5	13,720.8	0.1%	0.1%	47,360.8	46,357.9	-2.1%	-2.2%

Net sales	10,133.9	11,052.8	9.1%	10.0%	32,231.0	34,791.4	7.9%	6.4%
Gross profit	7,045.2	7,778.6	10.4%	11.4%	21,771.2	23,393.6	7.5%	6.1%
Gross margin	69.5%	70.4%	90 bps	90 bps	67.5%	67.2%	-30 bps	-10 bps
EBITDA	5,482.9	6,437.7	17.4%	18.0%	15,569.8	17,455.9	12.1%	10.6%
EBITDA margin	54.1%	58.2%	410 bps	390 bps	48.3%	50.2%	190 bps	190 bps
Normalized EBITDA	5,496.9	6,453.7	17.4%	18.0%	15,620.1	17,485.1	11.9%	10.5%
Normalized EBITDA margin	54.2%	58.4%	420 bps	400 bps	48.5%	50.3%	180 bps	180 bps
Profit	3,733.5	4,750.6	27.2%		10,420.6	11,354.1	9.0%
Normalized Profit	3,747.5	4,766.6	27.2%		10,470.9	11,383.3	8.7%
No. of share outstanding (millions)	9,693.6	15,661.9			9,693.6	12,677.6
EPS (R$/shares)	0.23	0.30	27.6%		0.65	0.75	15.2%
Normalized EPS	0.23	0.30	27.3%		0.66	0.75	15.0%

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

CAPEX, Pay-out and Financial discipline: During the fourth quarter of 2013 we invested R$ 1.4 billion in capital expenditures, totalling R$ 3.8 billion for the year, of which R$ 2.8 billion were invested in Brazil. During the year we increased our net cash position to R$ 8,680.4 million. Such position, however, does not account for the dividends and IOC payments of approximately R$ 4 billion announced on January 6, 2014 and paid as from January 23, 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 third quarter of 2012 (Q3 2012). Values in this release may not add up due to rounding.

SOURCE Ambev S.A.