Ambev SA Q3 FY2026 earnings call

• Strategic Pillars: Management emphasized a three-pillar strategy: (1) Lead and grow the category, evidenced by Brazil beer industry recovery and Ambev’s share gains; (2) Digitize and monetize the ecosystem via platforms like 'Bees' (B2B) and 'Zé Delivery' (DTC), which provide direct consumer data and expand total addressable market; (3) Optimize business through disciplined resource allocation, cost productivity (R$450 million reais non-commodity savings YTD), and organizational efficiency.
• Brazil Beer Performance: The Brazil beer segment showed robust momentum. Nielsen data indicated industry volume growth of approximately 1.3% across Q2 and Q3 combined, partially driven by FIFA World Cup demand. Ambev’s sell-out outperformed the industry, gaining market share in both on-trade and off-trade channels, particularly in premium and zero-alcohol segments. Brand equity reached a five-year high.
• International Markets: In Latin America South (LAS), Bolivia recovered with high single-digit volume growth, offsetting declines in Argentina due to adverse weather and soft consumption. Despite volume contraction in some areas, revenue management and portfolio mix drove significant margin expansion.
• Operational Efficiency: Cash flow from operating activities increased 39% YTD to R$15.6 billion. The company successfully managed financial exposures, reducing net financial expenses by 71% in Q3 compared to the prior year. Inventory levels are considered optimal for the upcoming high season.
• Shareholder Returns: The board approved a new share buyback program for up to 190 million shares (approx. R$3 billion). Total shareholder returns announced for the year approach R$8 billion gross of taxes.

The company reported strong consolidated financial performance for the third quarter of 2026. Total volumes grew by 0.8%, while net revenue increased by 7.6%. Normalized EBITDA rose by 8.9% to R$7.3 billion, driven by a 40 basis point expansion in normalized EBITDA margin. Normalized EPS grew significantly by 15.4%. On a year-to-date basis, total volumes grew 0.7%, with beer volumes outperforming at more than twice that pace. Net revenue growth was 7.3%, ahead of inflation, and normalized EBITDA grew 9.3%. In specific markets, LAS (Latin America South) demonstrated strong profitability despite soft consumer environments; CAC delivered healthy volume growth with margin expansion; Canada expanded both EBITDA and market share; and Brazil NAB saw mid-single-digit volume growth with sequential market share improvements.

• Cost Guidance: Management maintained its guidance for Brazil cash COGS per hectolitre (excluding marketplace products), estimating an increase between 4.5% and 7.5% for the remainder of the year.
• Margin Expansion: While no specific numerical margin targets were provided for the full year, management reiterated its ambition to expand consolidated margins over time through efficient resource allocation and disciplined cost management.
• Volume/Revenue Expectations: No specific forward-looking quantitative guidance for volumes or revenues beyond the current quarter was explicitly stated, but management expressed confidence in sustaining profitable growth into Q4 and 2027 based on current momentum.

• Macroeconomic Volatility: Operations are primarily in emerging markets subject to different economic cycles, currency fluctuations (e.g., devaluation impacting financial expenses), and varying consumer spending power.
• Tax Regulatory Changes: Potential implementation of the SIN tax (tax on alcohol) in Brazil poses a risk to pricing and profitability, though management advocates for tax neutrality.
• Social Impact of Online Betting: Management monitors the impact of online betting on household consumption debt, noting concerns that it may negatively affect beverage consumption, although recent data suggests potential improvement in food retail after betting restrictions.
• Weather and Seasonality: Adverse weather conditions, such as those affecting Argentina, can lead to volume declines. Conversely, reliance on favorable weather patterns creates volatility in historical comparisons.
• Commodity Price Pressures: Headwinds from aluminum and diesel costs continue to pressure cash COGS, requiring ongoing mitigation through sourcing and vertical integration.

Q: Analyst asked about Brazil beer pricing strategy, specifically balancing affordability against pricing power given price relativity is above last year.

A: CEO Carlos Lisboa confirmed the strategy remains unchanged: manage net revenue practically in line with inflation to protect both industry growth (via affordability) and profitability. YTD net revenue grew 5.8% in Brazil, well above inflation, driven by a healthy balance of pricing and portfolio mix. In Q3, net revenue ex-marketplace grew 4.8% vs 5.4% CPI. Price relativity was maintained above last year's levels while market share continued to gain momentum, indicating strong brand execution and portfolio strength allowing for incremental pricing without sacrificing volume.

Q: Analyst questioned the drivers of revenue per capita growth, asking to strip out mix/channel effects and World Cup impacts, and inquired about pricing carryover comfort for next year.

A: Lisboa attributed performance to consistent price execution aligned with annual plans and portfolio evolution, particularly in new category segments. He expressed high confidence in future pricing carryover, citing brand utility at a five-year high, improving segments in all channels, and encouraging results across all regions. The successful innovation response and contribution to growth position the company well for the dynamic context expected moving forward.

Q: Analyst asked for a 'tax-neutral' rate estimate for the proposed SIN tax on alcohol, suggesting ~4% on beer.

A: CFO Guilherme Fleury declined to provide specific estimates until details are released but highlighted two key points: first, Ambev has a history of navigating volatile economic and political changes effectively; second, Brazil beer already faces one of the highest tax burdens (>50% of final price). Ambev supports simplifying the tax system but insists on preserving tax neutrality to maintain the current burden. They will communicate specifics once available.

Q: Analyst sought details on profitability improvements in Latin America South (LAS), asking if margin expansion was due to commercial initiatives or raw materials despite volume contraction.

A: Lisboa explained that LAS achieved real top/bottom-line growth through strong margin expansion. In Argentina, despite a 1.4% volume decline due to weather and soft consumption, revenue management drove net revenue growth of 21.4% (ex-marketplace up 23.6%), leading to a 41.5% increase in normalized EBITDA and 300 bps gross margin expansion. In Bolivia, high single-digit volume growth offset Argentina's weakness. The success is attributed to applying the same revenue management playbook and digital capabilities used in Brazil.

Q: Analyst asked about the value of direct-to-consumer (DTC) data from 'Zé Delivery' for innovation and how it differs from third-party surveys.

A: Lisboa described Zé as a key enabler connecting directly with ~20 million young adult consumers annually, providing critical signals on category evolution. This direct access allows for rapid testing and scaling of new portfolio solutions (e.g., pink lemonade flavor) faster and with lower investment than traditional third-party surveys. The platform shows higher premium penetration (mid-30s vs mid-20s in core beer) and increasing basket diversity, offering unique insights into future consumption trends and occasions.